What is Yield Farming?
Yield farming is the practice of moving capital between DeFi protocols to earn the highest combination of trading fees, lending interest and token incentives. It powered much of the 2020-2021 DeFi growth but exposes users to smart-contract, oracle and economic risks.
Why Yield Farming matters
Understanding Yield Farming is part of building a solid mental model of how Bitcoin, blockchain and Web3 systems actually work. Concepts in the Ethereum category sit at the foundation of the broader stack — get them right and the rest is far easier.
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Related terms
- DeFi (Decentralized Finance) — Financial services built from smart contracts.
- Liquidity Pool — A smart contract holding pooled assets for trading.
- Staking — Locking tokens to secure a network and earn rewards.
More ethereum terms
- Ethereum — A programmable blockchain that supports smart contracts.
- EVM (Ethereum Virtual Machine) — The execution environment for Ethereum smart contracts.
- Gas — The unit measuring computational cost on Ethereum.
- NFT (Non-Fungible Token) — A unique, non-interchangeable token on a blockchain.
- Smart Contract — Code on a blockchain that automatically enforces its rules.
- Solidity — The most popular programming language for Ethereum smart contracts.
- Web3 — An umbrella term for blockchain-based, user-owned internet applications.
- DAO (Decentralized Autonomous Organization) — An on-chain organization governed by token holders.
Keep exploring
Continue with the full blockchain glossary — 136 terms in total — or read the developer blog and FAQ for deeper context.