What exactly is yield farming?

Ways to work with yield farming

Yield Farming, the “rocket fuel” of DeFi. Yield refers to the mechanism of generating rewards through the process of locking your otherwise static crypto assets. Yield farming is often interchangeably used with liquidity mining, which is a similar concept in which crypto assets are locked for the purpose of obtaining optimized rewards on the locked crypto assets.

Conventionally, when liquidity providers encounter an opportunity i.e., a protocol offering high returns, they switch to the more lucrative option. This jumping of one protocol from to the other often leads to the Liquidity Pools encountering extreme inefficiency, often costing them both time and resources. Liquidity mining and token farming are some of the more complex and rewarding segments of yield farming.