Yield farming, also known as liquidity mining, is gaining popularity in the cryptocurrency industry. It involves receiving reward tokens in exchange for locking or staking cryptocurrencies. The concept of yield farming has come from Decentralized Finance (DeFi) space. As the DeFi space has started gaining popularity, subsequently the concept of yield farming is driving attention in the cryptocurrency industry.
The rising popularity has resulted in the emergence of various projects offering returns of rewards in the form of new cryptocurrency tokens through yield farming. However, although the rewards carry certain benefits, there are risks and dangers of farming. In this article, we examine the basics of yield farming and the risks that it poses to a crypto farmer.