Yield Farming

Yield farming is the practice of using crypto-assets in decentralised finance (DeFi) protocols to obtain rewards, for example by providing liquidity or participating in other smart contract-enabled operations.

Yield farming rewards are not guaranteed interest or a form of passive income: they are variable and depend on the protocol’s rules, the total amount of liquidity, and market conditions, and they may decrease or fall to zero.

This activity involves specific and often high risks. These include: technical risks of smart contracts, the volatility of the crypto-assets used, the risk of partial or total loss of capital, and so-called impermanent loss. Yield farming takes place directly on decentralised protocols and is neither intermediated nor supervised by authorised entities. In the event of losses or malfunctions, there are no protection mechanisms equivalent to those provided by regulations governing regulated financial services. Read this article to learn more about fundamental financial risks.

Disclaimer: Young Platform does not offer the services described in this entry. Yield farming on DeFi protocols does not fall under the crypto-asset services regulated by Regulation (EU) 2023/1114 (MiCAR) and is not subject to the protections provided by this legislation. For details on the services actually provided by Young Platform, please refer to the General Terms and Conditions.

Correlated words

Liquid Staking

Liquid staking is a form of staking that issues a token representing the locked assets, which can be used while the assets remain locked.

TVL

Le TVL (Total Value Locked) est la valeur totale des crypto-actifs verrouillés dans un protocole de finance décentralisée à un instant donné.

Wrapped Token

A Wrapped Token represents the value of one crypto on a different blockchain standard, facilitating cross-chain transactions and usage.

Bonding

Bonding is the mechanism by which a protocol acquires liquidity or assets by offering its own tokens in exchange, often at a discount.

Staking Derivative

A staking derivative is a token representing staked crypto-assets and their rewards, which can be used while staking is active.

Swap

Swap is the exchange of one crypto token for another via a decentralised platform, enabling seamless asset conversion.

Staking

Staking is the locking of crypto-assets to help secure a Proof-of-Stake blockchain, in exchange for variable, protocol-dependent rewards.

Smart Contract

A smart contract is a program that runs automatically on a blockchain when the predefined conditions written in its code are met.

Crypto Lending

Crypto lending is the lending of crypto-assets to third parties in exchange for variable rewards that depend on the protocol.

ERC-20

ERC-20 is the technical standard that defines the common rules for fungible tokens created on the Ethereum blockchain (ERC-20 tokens).

DEX

A DEX is a decentralised exchange that allows crypto-assets to be swapped through smart contracts, without a central intermediary.

DeFi

DeFi (decentralised finance) is the set of financial services that operate through smart contracts, without central intermediaries.

DApp

A DApp is a decentralised application that runs on a blockchain via smart contracts, without relying on a central server.

DAO

A DAO is a decentralised autonomous organisation, managed through smart contracts and rules voted on by its participants.

CeFi

CeFi (Centralised Finance) refers to crypto-asset services provided by centralised operators acting as intermediaries between users.

Arbitrage

Arbitrage is a strategy that exploits price differences in the same asset across markets to capture a margin.

APY

APY (Annual Percentage Yield) is the annual percentage rate that takes into account the compounding of the amounts accrued.

APR

APR (Annual Percentage Rate) represents the annual percentage rate of an asset, calculated without taking compounding into account.

AMM

AMMs (Automated Market Makers) are smart contracts that facilitate the exchange of crypto-assets on decentralised exchanges (DEX).

Aggregator

An aggregator brings together services and data from multiple crypto-asset platforms, including DeFi protocols, into a single interface.