Learn With STEEM - Understanding Yield Farming - How To Farm On PancakeSwap
Yield farming is a method that enables crypto owners to get compensation for their holdings. Yield farming allows investors to earn interest from trading fee by depositing their crypto tokens into a lending platform. Some users are also granted additional rewards from the platform native token.
Farming functions similarly to bank loans. When the bank lends you money, you must repay the loan plus interest. Yield farming operates similarly, but this time, the banks are cryptocurrency holders like yourself. In order to farm it's requires you to provide liquidity in DeFi platform, the the liquidity tokens can be stake on the farming section to farm some certain tokens at certain annual percentage or earn the trading fee at a certain annual percentage, the annual percentage depends on the tokens you've provided to farm.
Like I previously stated, farming works with a liquidity pool, which on the other hand us a smart contract filled with cash (crypto tokens), the cash are deposited by the liquidity provider. Yield farming operates using the аutоmаtеd market maker (AMM) mechanism.
The AMM mechanism mainly depends on liquidity providers (LPs), who deposit money into liquidity pools. Most Decentralized platforms where users borrow, lend, and trade tokens are built on these pools. Users of decentralized platforms pay transaction fees to the market, which then divides those fees with liquidity providers based on their percentage of the pool's liquidity.
A lot of Decentralized platforms allows users to use their liquidity tokens on the farm section to earn either the platform native token, or most of the time a new tokens are farmed by locking your liquidity tokens for a certain number of days.
PancakeSwap is a great example of a decentralized platform that allows users to farm with their liquidity tokens. You earn the PancakeSwap native token (CAKE) or any other tokens, which can be harvest after the farming days are over, or you can harvest it anytime and pay a certain amount of fee as penalty fee... To engage on the farm section you'll need to first provide liquidity, the liquidity tokens will then be stake on the farm section, then you earn passive income at a certain annual percentage depending on the liquidity token you've provided. To understand liquidity and provide liquidity on PancakeSwap check this post
How To Farm On PancakeSwap
To farm on PancakeSwap, you must first deposit tokens to the liquidity pool. I'll describe how to farm on PancakeSwap since I have BNB-BUSD LP, which was provided in my previous post.
Go to the Farm area on the PancakeSwap main page, click on it, and then look for the BNB-BUSD; the earnings at APR will be shown.
Now, input the desired stake amount for the LP token and click Confirm to authorize the transaction. Your token will be staked, and you will be notified.
Note: you must have enough Binance smart chain token to cover the transaction fees
Here, you have the option to harvest the earnings or add more liquidity tokens. Clicking on the plus (+) or minus (-) signs will add or remove the liquidity tokens, respectively, while clicking Harvest will simply allow you to reap your earnings
DeFi has significantly enhanced the financial ecosystem by providing a variety of decentralized platforms that allow users to use their funds (crypto tokens) to generate passive income and do away with the necessity for banks (middleman). Users can lend and borrow money with no restrictions, barriers, or other types of obstacles as long as they have an internet connection. Users can generate passive revenue with their cryptocurrency tokens through farming and liquidity pools.
Thank you for reading, see you in my next post.
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Wow when I first heard about yield farming, it sounded so complex and unorthodox but now that you've explained, it sounds much more understandable. That means if I go deposit my TRC tokens in justlend, I am automatically yield farming. Might take you up on that then
On the lending platform JustLend, you can lend your TRC-20 tokens to make passive income as well as borrow tokens.
Few DeFi systems offers yield farming; one such platform is [Sunswap] (https://sunswap.com/#/home), which you may use to farm in the Tron ecosystem. The liquidity tokens will be staked on the farm section after you first provide liquidity.
Now that you are clear, I'll write an article outlining how to farm and give liquidity on Sunswap.
I didn't know anything about DeFi before but I got know in it was all about after doing my personal research. Your teaching gives me a better understanding.
I'm glad you've found my content useful, thank you for coming
https://twitter.com/Matthew08450011/status/1540980439954898952?s=20&t=J8L-flVs-7OVNCJoCqlvNw
Another great piece from you brr, you've always come up with new articles everyday.
Thank you for sharing
You gave made an interesting research.
Keep up with the good work
Hello dearest friend
Thank you very much for giving such an informative post.
I enjoyed going through your post and I hope to read more of your interesting post.
#steem-on 💙
Well explained. Yield Farming Technique in PANCAKESWAP. Thanks.
Thank you for stopping by...
Anyways, it been a long time, hope you've been doing great?
Ya. Now fine
Great, I'm happy to see you back...
I can't wait to learn from your contents
Hopefully will start again very soon
This is a great article. Yield Farming is a very famous earning method that we can use as a passive income. Thank you very much for providing such valuable topics here.
An amazing article you've written here, nicely done friend 👏🏽