Yield Farming, one of the main character in the DeFi space
Let’s see what yield farming is all about.
Yield farming is a way of earning benefits on your cryptocurrency that involves locking your assets for a period of time in exchange for rewards, such as more cryptocurrencies. At first this seems simple, but we assure you that it’s not.
Yield farming began in 2020 and since then yield farmers have earned rewards in the form of annual percentage yields (APR) that can reach triple digits. But these potential rewards come with a certain risk, the protocols and coins earned are subject to extreme volatility.
Yield farming is a benefit for its users as they can earn by holding their cryptocurrency assets for a period of time. Also, the yield-farming activity rewards the cryptocurrency platforms as well, as they attract more users searching for great rewards.
Another aspect that we need to consider when it comes to yield farming is that the locked tokens could also gain more value as more users would buy and hold it for long-term returns. Therefore, we can say that yield farming is one of the main pillars that supports the entire ecosystem for crypto.
So, to be more precise, yield farming is a process in which token holders receive rewards across various DeFi platforms by becoming liquidity providers to various token pairs and earn rewards in cryptocurrencies.
Now, you will see that things will become more clear: yield farming allows users to earn yield by staking their assets, like coins or tokens, in a decentralized application (dApp). In general, yield farmers use decentralized exchanges to lend, borrow or stake coins to earn rewards or speculate on price swings.
Yield farming is facilitated across DeFi with the help of smart contracts — pieces of codes that create financial agreements between two or more parties.
Now that you understand the concept of yield farming, another important aspect that you should consider is impermanent loss.
Impermanent loss is a risk that appears the moment you become a liquidity provider to a dual-asset pool in any DeFi protocol. It is the difference in value between depositing 2 cryptocurrency assets within an Automated Market Maker-based liquidity pool. It occurs when depositing them into an automated market maker (AMM) and then withdrawing them at a later date resulting in a loss, instead of just holding them in your wallet. So, you may not actually lose any money, but rather your gains are less relative. More than that, losses can be increased depending on how the market fluctuates.
It’s called “impermanent loss” because any losses are only accepted once the assets are withdrawn from the liquidity pool. Until then, the supposed losses are only on paper and may reduce or disappear completely depending on how the market evolves.
Yield farming with DYP is available on ETH, BSC and AVAX networks. You can become a liquidity provider for Uniswap, PancakeSwap or Pangolin using our smart contracts that will automatically add liquidity to one of the pools by depositing a supported asset like: WETH, WBTC, USDC, USDT, WBNB, BTCB, ETH, BUSD, CAKE, WAVAX, etc. You should know that all pool rewards are automatically converted from iDYP to WETH, WBNB or WAVAX (depending on the network that you choose) by the smart contract, decreasing the risk of iDYP price volatility.
For the safety of our users we have chosen three reputable security audit companies: PeckShield, Blockchain Consilium and Certik Foundation to provide their services to avoid any vulnerabilities in the development of our smart contracts.
In addition, all our smart contracts are monitored 24/7 through a Security Oracle, powered by Certik Foundation and accessible through our repo.
We are very proud that we managed to give yield farming a new perspective in the DeFi space by introducing an anti manipulation policy that aims to maintain stability, fair access to liquidity, and provide a secure and simplified DeFi platform for users of all sizes.
Another important section of our DeFi platform is DYP Tools, a service that will help our DYPians maximize their rewards by accessing the Yields section where they can see data for more than 4500 pools on ETH or AVAX networks and check important stats that will keep them safe and profitable, like available pools, level of confidence, TVL & APY.
DYP ecosystem is constantly growing, taking its rightful place in the DeFi space and becoming a project where no one is left behind.