Defi yield farming strategies

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Greetings to you all!

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Yield farming is most significant DeFi method that involve enhanced returns at investments by giving leverage to various protocols and assets. These are some yield farming methods I am sharing with proper examples.

Liquidity Provision (LP) Strategy

This strategy is a way of providing more liquidity to decentralized exchanges such as uniswap and for earning fees on trades.

As an example you should deposit ETH and USDC in uniswap LP pool and in this way you can easily earn 0.3% fees on trades.

Lending Strategy

Lending strategy is used for lending assets to borrowers at this platform such as compound and can earn interests at deposits.

As an example you can lend 10 ETH at compound at annual interest rate of 10% and can earn 0.10 ETH in interest over a year.

Yield Farming Pools Strategy

Yield farming pool strategies are used for joining pools such as Yearn,finance or Harvest Finance which automatically optimize yields across different DeFi protocols.

Again as an example you can deposit 10 ETH into a Yearn or finance pool and in this at can earn yields from different lending and LP strategies.

Staking Strategy

Staking strategy involves stake assets such as ETH or DOT for supporting blockchain networks and for earning staking rewards.

As an example you can stake 10 ETH at Ethereum 2.0 network and can earn 5% annual rewards of staking.

Arbitrage Strategy

Arbitrage strategy involves exploiting price differences across multiple exchanges or protocols for earning free of risks profits.

As an example you can buy 1 ETH at Uniswap at $100 suppose, and can sell it at coinbase at $110, earning a significant profit of $10.

Leverage Strategy

Leverage strategy are using borrowed assets for amplification yields, but beware about liquidation risks.

As an example we can say that you have borrowed 10 ETH at Aave at 5% interest and then you have deposited it into a Yearn,finance pool earning 10% yields, so this is resulting in net gain of 5%.

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Yield farming have many challenges and risks such as market volatility, liquidation, and smart contract vulnerabilities.There is a need to proper research and to understand different strategies and protocols before making any investment. I know that I have shared some of the interesting examples but it is important to know that these words just imaginary example by thinking them you should not make any investment decision.

Have a blessed day