Yield Farming 101 — APYSwap

DeFi was one of the hottest buzzwords of the summer in 2020, with outlets like Forbes and The Washington Post picking up on the explosive popularity of the decentralized system. Yield Farming was a major factor for DeFi’s huge growth, and has been called the “rocket fuel of DeFi.”

In yield farming things can get complex fast — and that’s where APYSwap come in, with our user-friendly service.

But what exactly is it, and how can you maximize your benefit from Yield Farming with the help of APYSwap?

Yield Farming — The Basics

In layman’s terms, yield farming is a way of locking your cryptocurrency up and loaning it out while being rewarded at fixed or variable rates of interest. Rather than allowing your cryptocurrency to languish in your wallet, you are actively putting that money to use, and gaining rewards in the form of LP tokens, which vary based on the DeFi protocol that you put your funds into.

Yield farming is a cornerstone of the exciting world of Decentralized Finance (DeFi), which places decentralization of finance as its ultimate value. As a result, DeFi has grown dramatically over the past year, and yield farming is a major factor behind that growth, with more and more people staking their money on the reward that working within these DeFi protocols can provide.

How Does Yield Farming Work?

By engaging in yield farming, the user is providing liquidity to a marketplace. When funds are added to a liquidity pool, a marketplace is empowered to trade, borrow and lend assets. By becoming a liquidity provider, you are rewarded with returns on the funds that you have added.

Traditionally in yield farming, for example, by using your tokens to reinvest in other liquidity pools, users can generate a chain of investments that provide higher returns and rewards. These chains can have many links.

Similarly, the thing with yield farming is that it requires an incredible amount of background knowledge, as well as constant supervision of markets — simply put, it’s incredibly time-consuming. While investment into yield farming can result in major rises in fortune, the uninformed user can also suffer incredible downswings.

With such high volatility, it’s difficult for the average DeFi user to gain real benefit from Yield Farming. In particular the technology and instruments that have been put in place for DeFi can be intimidating, and often don’t provide users with enough information about the risks and rewards of different DeFi protocols.

APYSwap is trying to change that, by supplying average consumers with an easy to use product, cutting out the need to spend time studying markets, parsing risks from certain DeFi protocols, all while maintaining the integrity at the heart of DeFi, decentralization and self-custody.

Why Should You Do It?

If you haven’t picked up on it already, the rewards available from yield farming can be huge.

APYSwap is giving consumers the option to put their passive income to use. With platforms becoming increasingly user-friendly, and in particular, with APYSwap cutting out the increasingly high transaction costs that are associated with DeFi, we are demystifying the world of yield farming.

APYSwap Foundation is established to inspire and support new projects using the APYSwap ecosystem.