Decentralized Finance, or DeFi for short, stands above all for returns. You have your hands full with the comparatively simple types of lending, borrowing and liquidity mining. But when you combine them with each other, you try to get the optimal return. The concept is called yield farming.
4 DeFi strategies for maximum returns
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Yield farming is based on liquidity mining
The basic principle behind almost all DeFi applications is to let your existing capital work for you. So it goes far beyond typical crypto hoddling. In a first step, you deposit your cryptocurrencies into liquidity pools, for example, in order to generate returns. In return, you receive income in the form of additional cryptocurrencies. This type of DeFi game is called “liquidity mining”. You support decentralized trading platforms (Decentralized Exchange, DEX) in their operation and get paid for it. But if you want to optimize your returns, this is just where you start.
After liquidity mining is before yield farming
The clever DeFi enthusiast can now use the income from liquidity mining to make further capital. For example, he can make it available to other users on a lending platform in order to generate further passive income.
Yield farming is ultimately the premier class of DeFi. Anyone who has mastered it down to the last detail and dedicates their everyday life to returns can even make a living with it, but only if they know exactly what they are doing. Ultimately, there are many things to consider, from the right wallet to the right cryptocurrencies, the right decentralized exchanges and the perfect timing.
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