Yield farming refers to depositing tokens into a liquidity pool on a DeFi protocol to earn rewards, typically paid out in the protocol’s governance token.There are different ways to yield farm, but the most common involve depositing crypto assets in either a decentralized lending or trading pool to provide liquidity.
While the yield farming process varies from protocol to protocol, it generally involves liquidity providers, also called yield farmers, depositing tokens in a DeFi application. In exchange, they earn rewards paid out in the protocol’s token.
