A Guide to Yield Farming's Risk and Rewards

Earning cash on crypto using yield farming is popular. It's also risky. Here's what to know (and what to avoid).

bitcoin symbol over financial chart
(Image credit: Getty Images)

Even with the recent downturn in the crypto markets, the total value of assets locked in decentralized finance (DeFi) protocols currently sits at over $42 billion. For the uninitiated, decentralized finance is a growing collection of financial tools and protocols allowing users to trade, borrow, and lend money on the blockchain without the need for third-party approval. 

Perhaps the largest catalyst for DeFi’s growth has been the rise in popularity of yield farming, a rather risky ROI-optimizing strategy that offers significantly greater returns than traditional investing. Due to its high-risk, high-reward nature and the general preference toward speculation in crypto, yield farming has quickly become one of the most favored use cases of decentralized finance. 

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Randy Ginsburg
Contributing Writer, Kiplinger.com

Randy is a New York-based freelance writer and author covering the world of emerging technology and entrepreneurship. Deeply interested in the way technology will impact his grandkids' lives, Randy has been featured in several publications, including NFT Now, Forbes and Newsweek.