The world of crypto is evolving and creating new opportunities for enthusiastic investors. Yield farming has been one of the greatest drivers of the explosion of decentralized finance (DeFi). It gives the investors a fair chance to improve their revenues. Yield farming is basically a popular strategy that allows investors to earn greater interests and maximize returns. However, in order to get the best benefits, it is important for you to know the best yield-farming protocols.
There are a number of yield farming techniques that you can leverage in order to generate money. However, it is just not possible to exploit all the techniques at the same time. Each platform comes with its own pros and cons. Therefore, you must consider investing a significant amount of time in researching the platforms and seeing the technique that it deploys.
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5 Most Popular Yield-Farming Protocols That You Must Know
There are a number of crypto yield farming protocols in the investment market. However, it is always better to choose the best yield farming platform for better outcomes. Are you wondering what the top yield-farming protocols are? In order to make your task easy, here is the complete yield farming list that you must know about. Let’s take a look!
When it comes to the best yield-farming protocols, there is a high chance that you must have heard about PancakeSwap. However, if you are new to the world of crypto, you may be hearing of PancakeSwap for the very first time. Launched in 2020, it is one of the greatest yield farms available on the Binance Smart Chain. This protocol has evolved rapidly over the years and now has a trading volume of about $400M.
PancakeSwap allows the users to yield farm by providing liquidity. In return, the users get Liquidity Pool tokens that are convertible into CAKE or other cryptocurrencies. To yield farm on PancakeSwap, the users can either become liquidity providers or stake their native tokens to earn rewards. When you opt to become a liquidity provider, you have to add tokens to the liquidity pool and farm the denominated token. The high yields, cheap and fast transactions, and generous rewards are the most appealing features of this yield farming platform.
Non-fungible tokens (NFTs), BSC token exchanges, and interest-earning staking pools are all available on the platform. Moreover, PancakeSwap also offers a gambling game where you will have to guess the future Binance Coin (BNB) price. The platform also incentivizes the users of DeFi through lotteries. The exciting features attract more users to leverage this platform for yield farming. However, it is important to note that PancakeSwap also has a number of risks. Some of the potential risks are the failure of smart contracts and impermanent loss owing to price fluctuations.
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Uniswap is also one of the top crypto yield farming protocols that you must know about. It is often called the king of DeFi exchanges. It is one of the topmost decentralized exchanges available on the Ethereum network. It allows the users to leverage its liquidity pools to earn greater interest on the crypto holdings.
It enables the users to swap thousands of ERC-20 tokens. For every swap, the liquidity providers can earn a percentage or portion of the trading fees. Uniswap is a platform in which the liquidity providers need to stake both pool sides in a 50/50 ratio. The interest rates on the platform will vary depending on the market fluctuations and the pool.
The frictionless feature of Uniswap makes it a top platform for trustless token swaps. There are a number of versions of Uniswap that create confusion among the users. However, it is important to note that each version increases the accuracy and capital efficiency of the exchange. That means users can avail better rates as well as lower fees. Currently, it has two live versions, V2 and V3. The latest Uniswap V3 version is growing rapidly with more than 200 integrations.
However, it is essential for the investors to be careful while depositing their assets in the liquidity pools. It is because the drastic changes in the price can result in significant impermanent loss. Moreover, like all the other DeFi platforms, there is a chance of smart contract failures, thereby resulting in potential losses. The gas fees of the Uniswap protocol can be high as it is based on the Ethereum platform. But the good thing is that it does not require any sign-ups or identity verification for using the app.
Familiar with the concept of liquidity but don’t know how liquidity provider tokens work? Read: How liquidity provider tokens work!
When it is about the top yield-farming protocols, Aave cannot be overlooked. In terms of yield farming, Aave is a top contender. It is a popular open-source liquidity protocol that enables users to borrow as well as lend crypto. Aave is one of the most used yield farming platforms with a market worth of more than $3.4 billion. The native token of Aave is AAVE. The token incentivizes the users in order to leverage the platform by providing them with fee discounts, voting power for governance, and various other benefits.
Aave is an Ethereum based decentralized platform that provides low-interest crypto lending and borrowing. It enables the users to earn interest on their deposits. However, the interest earned will greatly depend on the borrowing demand in the market. Depending on the current scenario in the market, the interest rate is auto-regulated.
The AAVE tokens facilitate quick earnings and ensure compound interest in the investing funds. The users who deposit more money are likely to gain more volumes of the token. Moreover, Aave also provides flash loans to users. This attractive functionality, along with other functionality, makes it a popular platform for DeFi users. The users of this platform can earn nearly 15% APR for lending. That speaks of the huge benefits that Aave offers to its users.
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Curve Finance is one of the top yield farming pools in the market. When it comes to the total value locked, the Curve Finance platform proves to be the biggest DeFi platform, with about $19 billion available on the platform. Curve Finance has been specially designed in order to ensure efficient cryptocurrency trading and offer high annual interest returns. The platform has its market-making algorithm and makes maximum use of lock funds in comparison to other DeFi platforms. This serves as a beneficial strategy for the liquidity suppliers as well as the swappers.
Curve Finance has a long list of stablecoin pools that have good APRs. The APRs of Curve Finance is quite high. It ranges from about 1.9% to 32%. Moreover, the platform allows users to trade stablecoins with low slippage and minimal fees. The stablecoins are known to be safer owing to the stable base value. However, it is important to note that there are still certain risks with Curve Finance. Like all the other platforms, the main risks are smart contract failure and temporary loss.
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Venus is also one of the top yield farming pools available on the Binance Smart Chain. It is a popular algorithmic money market that allows decentralized borrowing as well as lending. The platform allows users to deposit their crypto assets such as ETH, BNB, and stable coins in order to earn lucrative interests. Moreover, Venus provides users with an easy-to-use and intuitive asset borrowing and lending solution. It allows the users to borrow crypto against certain collaterals. In addition, the users can also lend assets in order to earn yields.
The low-cost and fast transactions are some of the prominent features of the platform. It also offers a deep pool of liquidity and wrapped tokens. It enables the users to make use of their collateral in order to borrow assets. Venus protocol is known to be one of its kind as it allows users to mint synthetic coins with over-collateralized locations in order to invest further in the financial products of the platform.
Moreover, yet another attractive feature of the platform is that it enables users to earn various rewards. Launched in 2020, the platform is evolving at a rapid pace and becoming one of the leading protocols in the market. The Venus protocol has about $1.5 billion assets on BSC.
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Yield farming is becoming one of the most popular ways to earn greater revenues in the world of crypto. Now that you have the entire yield farming list of the best platforms, choosing the right one will be relatively easy. However, make sure to research all the platforms in order to determine which is best for you. Ensure keeping in mind the potential risks of the platforms while making investments.
The DeFi space is evolving and growing at a rapid pace. It is not likely to slow down any time soon. With investors looking for ways to make good use of their assets and maximize returns, new farming techniques are sure to evolve. Therefore, in order to remain profitable, it is important to stay updated about the new techniques. Leverage the high-reward and high-risk strategy of yield farming and get potentially high returns on your investments.
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*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!