Yield Farming in DeFi | 10% for @tron-fan-club

Yield farming is a concept of supporting the liquidity of Decentralized Finance. Yield farming is the practice of utilizing various DeFi protocols to maximize one's cryptocurrency holdings by earning interest or rewards. This system got a mass popularity in DeFi system. The foundation of yield farming means the lending and borrowing protocols of DeFi platforms. By supplying funds to liquidity pools or lending them out, users can earn interest on their assets. These assets are called as "yield-bearing" tokens. For their support to the pool in return for providing liquidity, users receive rewards in the form of interest payments or additional tokens.

Source

This system can easily be compared with interest pain in banking system. For the deposit to the bank, the depositors get extra interest. The amount depends on the amount deposited by depositors. Similarly the interest token depends on amount of supporting the fund in liquidity pool. Depositors fund is invested by Banks to get return. In this point of view, Yield farming is similar concept to Banking system.

The process of yield farming has multiple steps. Users begin by depositing their assets into a chosen DeFi protocol. These assets are then used by the protocol to facilitate lending or trading activities. For the investment users receive "yield tokens" that represent their share of the pool. These yield tokens can be staked in other DeFi platforms to earn further rewards or can be traded on decentralized exchanges. DeFi has some technical complexities. Users must be vigilant in handling different wallets, interacting with smart contracts, and understanding the intricacies of various protocols.