Today, we will discuss about farming and staking in more simpler form rather being confused. DeFi and NFTs are the future of Cryptocurrency.
Yield farming, also known as liquidity mining, is gaining popularity in the cryptocurrency industry. It involves receiving reward tokens in exchange for providing LPs or staking cryptocurrencies. The concept of yield farming has come from Decentralized Finance (DeFi) space.
Farming
Farming is making a liquidity on a market and getting TOKEN-LP, and then you need to stake or deposits that LPs token to any Defi Project. Always try to select healthy and visionary project. Example :- Pancakeswap, Julswap, Burger and so on. After that you will getting rewards, the amount of rewards is depend on allocation or provisions of each project. Farming APR and APY always differs. Rewards from Farming are good for passive income and best for long term. APY stands for annual percentage yield whereas APR which stands for annual percentage rate. Farming needs one pair or two token (LPs) at a time of staking or depositing.
APR & APY
The primary difference between APR and APY is that APY is inclusive of compounding interest. APR represents the annual rate charged for earning or borrowing money. APY takes into account compounding, but APR does not. But while APR and APY looks somewhat same, but they are quite different and not created equal. APY, or annual percentage yield, takes into account compound interest, but APR, which stands for annual percentage rate, does not.
Staking
Staking token to earn new token. Staking is adding or depositing certain tokens to any DeFi project and get rewards in a certain token too. For example, PCS have many pool , stake cake to earn new token. Each DeFi project has different reward amount. Staking yield is in APR and APY too. Farming needs LPs whereas Staking need token staked in those pool to earn another token.
Farming is risky but have high rewards whereas Staking is risky free with low rewards. All this include same risk like investment in any cryptocurrency. Cryptocurrency are volatile and high risky.
How much rewards from farming or staking?
From such huge numbers of defi project, each project has different rewards value. The rewards usually more 100% per year or different APR and APY. The advantage from Defi project is we could make withdrawals anytime without waiting for any admin confirmations. We can make a deposit and withdrawals anytime. Like Deposit in the morning and withdrawal in the night, as more flexible than bank. Own control and no need of third parties interventions. Rewards withdrawals and Staking an token/LPs in pool is very flexible.
Is it safe to deposits TOKEN-LP to DeFi?
Risky is everywhere but Audited DeFi Project are safe. DeFi running on smart contract and the smart contract are visible to public. So, smart contract audit services are available to determine whether the project is safe or not. Smart contract transactions are visible on explorer. Investment in crypto is like you are okay if you lose invested money in cryptocurrency. Cryptocurrency is risky at last.
How big are profit at DeFi?
The Profit is very big, many DeFi projects provides huge returns up to 100% or even more than 500% so on per month. Defi Project is best way to earn passive income while sleeping. Money work for you in Defi. Profits and Rewards are huge in DeFi project.
Lastly, always do research and take care of yourself and your funds.
Have a great and safe day!
