Yield Farming

Rather than leaving cryptocurrency idle in a wallet, yield farmers put their assets to work across onchain DeFi markets. This is distinct from staking, which sees participants commit assets to securing a Proof-of-Stake (PoS) blockchain, rather than depositing them into DeFi protocols.

For example, yield farmers can deposit assets into liquidity pools to facilitate trading on decentralized exchanges (DEXs) such as Uniswap, earning a share of the fees in return. Another common example is DeFi lending protocol Aave, which allows yield farmers to lend out their assets and earn interest paid by borrowers. Some more advanced yield farmers will move their assets between protocols or reinvest their rewards to maximize their returns.

DeFi yields are commonly displayed as an Annual Percentage Yield (APY), which accounts for compounding. Some protocols, such as ve(3,3) DEX Aerodrome, subsidize yields with additional rewards paid out in the native platform token — a common way for newer protocols to attract liquidity. Total earnings for yield farmers can therefore fluctuate depending on both platform activity and the price of the native platform token.

Yield farming comes with its own set of unique risks. These include hacks and exploits: in April 2026, attackers exploited security weaknesses at Solana-based perpetual DEX Drift Protocol, draining approximately $285 million from its vaults. Deploying funds into liquidity pools also brings the risk of impermanent loss if the prices of the assets change relative to each other, potentially leaving liquidity providers worse off than if they had simply held the assets.