Best Risk-Reward Yield Farming Platforms 2024
Yield farming is now one of the hottest topics in decentralized finance, and there is a high chance you may have already heard something about the insane returns that some of the yield farmers are making.
Today, we are going to take an in-depth look at everything you need to know about yield farming as a beginner. So, what is yield farming? How is it different from staking? What are some examples and best yield farming platforms? And also, what are the risks involved?/ We'll be going through all of these in this article.
Start Trading Crypto Now with ByBit!What is yield farming?
At its core, yield farming, also known as liquidity mining, is a process that allows cryptocurrency holders to earn rewards on their holdings. With yield farming, you can deposit units of a cryptocurrency into a lending protocol to earn interest from trading fees.
Some users are also rewarded with additional yields from the protocol’s governance token.
Yield farming works in a similar way to bank loans. When the bank loans you money, you pay it back with interest. Yield farming does the same thing, but this time, the banks are crypto holders like yourself.
Yield farming uses “idle cryptos” that would have otherwise been wasted away in an exchange or hot wallet to provide liquidity in decentralized finance protocols like Uniswap or Pancakeswap in exchange for returns.
What’s so special about yield farming?
To put it bluntly, the main benefit of yield farming is its unimaginable profits. If you arrive early enough to adopt a new project, for example, you could generate token rewards that might rapidly shoot up in value. Sell the rewards at a profit, and you could treat yourself or choose to reinvest.
It's becoming a very popular and legit way to make passive income in the coming years. Currently, yield farming can provide more lucrative interest than a traditional bank, but there are of course risks involved too.
Interest rates can be volatile, making it hard to predict what your rewards could look like over the coming year, not to mention that decentralized finance is a riskier environment in which to place your money.
Okay, having said that, let’s look at the best yield farming platforms.
Best yield farming platforms
Yield farmers will often use a variety of different Defi platforms to optimize the returns on their investments. These platforms offer variations of incentivized lending and borrowing from liquidity pools.
If you are interested in the idea of yield farming, consider one of the following platforms to invest in.
Bybit
Bybit is a great place for beginners to start their yield farming journey, as they pool the best rates and pools from all over the cryptosphere.
The platform was established in 2018, and it is an innovative, fast-growing cryptocurrency derivatives exchange. The company was founded by a team of professionals with expertise in investment banking and the Forex industry.
Bybit has its headquarters in Singapore and is registered in the British Virgin Islands. It envisions a global economy and provides a seemingly fast, secure, and transparent trading system.
It has embarked on a journey to build the next-generation financial ecosystem powered by innovative and advanced blockchain technology. With more than 1.6 million Bybit users globally, whether retail or professional clients, Bybit remains customer-focused and endeavors to provide the best user experience.
Bybit Earn is one of the best ways to earn crypto for total beginners and experienced traders alike. The product is simple to use, making it perfect for beginner traders. The annual percentage yields are among the best in the industry, and the platform uses sophisticated security measures to protect investments.
By investing your crypto holdings in Bybit Earn, you help them grow while minimizing your daily commitments. This dynamic makes the product ideal for busy investors who lack the time and energy for consistent engagement.
Binance
Binance Earn is your crypto savings account. Here, you’ll find a great variety of options for earning passive income with your crypto holdings. It allows you to earn rewards on your idle assets, either on flexible or locked terms.
Flexible products can be subscribed to and redeemed at any time, so you can retain flexibility and liquidity over your assets while earning daily rewards.
Locked products provide higher rewards in exchange for your assets being committed for fixed terms with predetermined redemption dates. You can still choose to redeem your full balance at any time before the redemption date, but you will forgo all the rewards you have received up to that point.
So, if you’re holding some money in your Spot Wallet, why not earn rewards on these assets with Binance Earn? Make your assets work harder for you by making a simple choice between Flexible and Locked Simple Earn products!
Huobi Global
You may already be aware of the long-running crypto exchange, Huobi Global. But you might not be aware of their Huobi Earn feature, where Huobi users can simply farm their crypto assets and start earning passive income.
Huobi Global, one of the leading cryptocurrency exchanges, entered the blockchain industry in 2013 to make the financial sector more efficient and wealth more accessible to everyone.
Huobi has a whole host of trading options, including spot and margin trading, derivatives, and futures. They also have loan options and other ways to earn money with your cryptocurrencies.
Huobi Earn is very similar to Binance Earn. Instead of just holding your assets in your wallet, your crypto assets can be deposited into flexible or fixed-term products that will generate interest for you. Flexible Earnings allows you to earn daily returns without having any lock-up periods, which gives users more flexibility with their crypto.
With flexible terms, the risk is lower because, obviously, you can withdraw your tokens at any time. Because of this, you won’t find the APYs as high as, fixed earnings, which essentially means locking up your crypto for a fixed period of time.
Coinbase
Coinbase is one of the most popular and best crypto exchange platforms which also offers decent yield farming options. With a simplistic, easy-to-use interface as well as accessible payment options, new crypto investors will greatly benefit from Coinbase. Millions of traders trust it and invest in it.
You may buy digital currencies with a debit or credit card here, and once you have cryptocurrency in your Coinbase account, you may begin earning interest.
Coinbase Earn, which allows you to earn free cryptocurrency in exchange for finishing instructional modules about it, is one of the more exciting features of this exchange. It’s one of the best crypto exchanges that provide yield farming opportunities to earn decent profits.
As a yield-farming crypto platform, its annual percentage yield is on the low side - up to 5.75% but it’s also one of the most trusted names in the crypto industry, with industry-leading security. Its yearly return still far outperforms traditional savings accounts at high street banks, which as of 2023 pay an average of 0.05% interest to savers.
Crypto.com
Crypto.com is among the top-class yield farming platforms that let investors get an approximately 14% yearly return on stablecoin investments. The platform also supports more than 50 cryptocurrencies, which are not affected by the reward structure changes.
Crypto.com also provides a wide range of services, including buying and selling cryptocurrencies on the market, swapping them with other users using your Defi wallet, and making crypto payments with a prepaid Visa card.
Users can also make a fee-free wire transfer or electronic bank transfer deposit into their Crypto.com accounts. For individuals wishing to invest in cryptocurrencies at the highest rate possible, Crypto.com is the ideal place to go.
Bitget
Bitget is a crypto exchange based in Singapore. The yield farming platform offers a wide selection of crypto coins and tokens for trade through the spot or futures markets. Bitget has received regulatory licenses from the US, Canada, and Australia, making it a trusted exchange.
The platform’s Flexible Savings is an easy and secure way for users to grow their crypto assets. Users can deposit funds into any one of their savings products and start earning interest every day.
The Bitget cryptocurrency exchange will be an excellent choice for beginners. The exchange offers a convenient trading platform, which a beginner can learn to work with rather quickly.
Over six different crypto farming options are available; you can find the details in the DeFi section, and the platform offers some of the lowest trading fees of any exchange globally.
eToro
eToro began as a platform to invest in stocks, commodities, and forex trade in 2007 - which it still is today, alongside being a crypto platform since shortly after the development of Bitcoin and other cryptos.
eToro is now a well-known yield-farming platform that provides Cardano, Ethereum, and Tron crypto-farming services at up to 6.25% annual percentage yield, although that can vary depending on your loyalty level in the eToro VIP program.
Since all interest-bearing tools on eToro are supplied on a flexible basis, there is no necessity for you to lock your tokens up for a minimum period. This will work for anyone who might need quick access to their cryptocurrency assets.
Additionally, eToro provides a virtual brokerage account, so you can test the platform without risking any real money if you're new to trading or want to see if the platform suits you.
Kraken
Based in San Francisco, Kraken is one of the world’s largest global digital asset exchanges. Kraken is trusted by more than 5 million traders, institutions, and authorities around the world.
Two years after the introduction of Bitcoin, Kraken was born in the heart of San Francisco. It is one of the oldest and most popular cryptocurrency exchanges and one of the first exchanges to offer crypto-to-fiat currency trading.
The yield farming platform is committed to providing the most secure and reliable farming infrastructure for its clients while delivering competitive returns through a friendly and intuitive interface.
You can start farming in just a couple of clicks and automatically earn rewards twice a week. You can earn up to 21% a year on your crypto assets, and you can instantly stop at any time with no penalties.
Kraken aims to simplify the yield farming process as much as possible, no lockup period is required, and compound interest is paid daily. The platform also focuses on the main cryptos, like Bitcoin, Ethereum, and the major stablecoins, like USD Coin.
CoinEx
Since it was founded in 2017, CoinEx has marched forward while striving for its vision: making the world a better place via blockchain. It aims to build an easy-to-use crypto exchange that benefits all investors who wish to trade crypto.
In the CoinEx Financial Account, you can deposit or withdraw cryptocurrencies at any time with no minimum limit, and earn compound interest.
CoinEx Financial Account, a product that increases the value of coins, is a good farming choice. After transferring idle assets to your financial accounts, you will receive revenues yielded by their financial accounts even without trading.
Currently, ten cryptos are supported, but in the future, the financial account will be open to more coins in light of market demand to diversify the asset management service.
Is DeFi yield farming risky?
All investment products within the crypto space carry an inherent level of risk. In the case of yield farming crypto, there are several core risks to take into account. At the forefront of this is the implication of impairment loss.
This will occur when there is a valuation imbalance in the respective farming pool. In turn, the investor would have made more favorable gains had they kept the tokens in a private wallet as opposed to a yield farming pool.
Investors should also consider the risk associated with the chosen platform. For instance, if there is a bug in the smart contract that backs the platform and this is exploited by a hacker, then the tokens held in the yield farming pool could be stolen.
Investors should also consider the volatility risk. After all, if the value of tokens held in the yield farm declines, this will result in a financial loss.
Yield farming platform risk-reward balance
Things to consider when choosing a high-yield farming platform with moderate risk
1. Smart contract risks
The agreement between parties on specified norms that automatically execute themselves is contained in smart contracts, which are paperless digital codes. Smart contracts do away with intermediaries and make transactions cheaper and safer.
However, they are vulnerable to attack methods and coding errors. Users of some well-known DeFi platforms have all lost money due to fraudulent smart contracts.
2. Liquidation risks
Defi platforms employ the deposits made by their consumers to saturate their markets with liquidity, just like in the traditional finance sector, so they can receive loans or external funding. But if the collateral's worth falls below the loan's cost, there can be an issue.
3. APY on offer
The annual percentage yield, otherwise known as APY, is a key factor to consider when making a choice.
Different cryptocurrencies also have different interest rates within a single platform. A crypto exchange may reward you with 1.5% APY for farming one coin and as high as 18.00% for another.
Some crypto-farming platforms have a stipulated APY rate for users. The higher the APY a platform offers, the more income you can generate.
4. Fees
Fees are also crucial in selecting a crypto-farming platform. Research the fees the platform charges for farming to weigh your options. Several DeFi farming platforms offer zero fees for farming.
5. Security
The security of your funds is non-negotiable, and you should pay close attention to this. The first port of call-in security matters if any global body regulates the platform. Added to this, you should also research the security measures on offer before signing up.
How to manage your risks
Ways to manage money and risks when crypto farming.
1. Do not invest all your money in one project
Some people offering crypto yield farming tips might not have your best interests at heart. So you don’t get stung by making the same mistakes as others.
Set limits on how much you invest in a particular digital currency, and don’t be tempted to yield farm with more money than you can afford to lose. Cryptocurrency yield farming is a high-risk business, and more users lose money than don’t.
2. Form a portfolio of promising projects with varying degrees of risk
It doesn’t pay to have too much invested in one single cryptocurrency. Or as they say, "don’t put all your eggs in one basket."
Due to the unpredictability and volatility of cryptocurrencies, it is possible to lose your entire investment capital in minutes when investing in high-leverage derivatives such as cryptocurrencies.
As such, investors should observe a stricter limit; the rule when it comes to yield farming in volatile assets is to form a portfolio of promising projects, and you should risk only 1-2% of your capital in a given token.
3. Be in it for the long term
Prices can rise and fall quite dramatically from day to day, and novice farmers are often duped into panic selling when prices are low.
Cryptocurrencies are not going away. Leaving your money on the crypto farm for months or years at a time could offer you the best rewards.
4. Conduct a thorough analysis
With so many cryptocurrencies on the market, it can be difficult to tell what’s real and what’s not. When you invest in fake coins, criminals can steal your identity and often your hard-earned money.
Don’t take anyone else’s word for it, and use as many sources as possible to do your own research on coins before you buy them.
How does crypto farming work?
First of all, it’s worth noting that to function, yield farming requires liquidity providers and liquidity pools. Yield farming works on an automated market-maker model (AMM) that involves both the yield farmers and the liquidity providers.
An AMM is just a fancy way of describing an exchange that crowdsources its liquidity. AMM eliminates the conventional order book, which contains all “buy” and “sell” orders on a cryptocurrency exchange.
To become a liquidity provider, all you have to do is add your funds to a liquidity pool, which powers a marketplace where users like you can carry out several procedures with their tokens, including borrowing, lending, and exchanging.
Participants in yield farming, or "yield farmers,” keep cryptocurrencies in liquidity pools, to earn rewards.
Professional yield farmers are knowledgeable about the Ethereum network and its technical aspects, so they prefer to move their funds around various DeFi platforms with a view to getting the highest possible returns.
Some protocols allow users to diversify their portfolios and lock those crypto assets into protocols in order to maximize yields, they even provide payouts in the form of multiple cryptocurrencies.
Once you’ve locked up your funds in the pool, you’ll get fees that have been generated from the underlying Defi platform or reward tokens.
DeFi Lending Platforms ComparisonHow to yield farm - guide for beginner
Bybit is our number-one pick for the best crypto-farming platform. If you are looking to earn on Bybit, these steps should help you get started.
Step 1
To begin, you’ll need a verified Bybit account.
Then download the Bybit mobile app for a smooth experience.
Step 2
Log in and select “More” from the homepage.
Step 3
Next you click on “Earn” and then on “Dual Asset.”
Step 4
Select your preferred “Plan” and that’s it.
Step 5
Come back at the end of the plan to collect your gains. Remember that you must have the crypto to deposit for the plan to work, and this process might differ slightly from one platform to another, but this is how it works across all of them.
Yield farming vs crypto staking
If you are new to decentralized finance, you would probably find it confusing when people refer to "staking" and "yield farming" as if they were the same thing. If you ask what "yield farming" is, most experts will believe that you have been living under a rock for the past year.
Yield farming is a complicated process compared to staking. Experts may easily differentiate between these terms, but you could easily get your wires crossed initially. Let me clear the air a bit for you with the following differences;
1. Complexity
Staking is a much simpler way of earning income by locking crypto money. On the other hand, yield farming is a complex procedure, as the investor has to decide which lending platform should be used and what kind of tokens he wants to lend.
If the investor chooses to yield farm on a Decentralized Exchange often referred to as DEX, it would be necessary to deposit a pair of coins in abundance, and the reward would be based on the number of deposits for enhancing the liquidity of the exchange.
Although it’s a bit of a complicated procedure, it’s much more profitable than staking. It’s the reason why Defi yield farming services are growing like mushrooms.
2. Risk factor
There are some risks associated with yield farming. Rug pulls and bugs in smart contracts may cause a loss of investments, but this would seldom happen if the Defi yield farming development services company programs your smart code with care and accuracy.
Staking is risk-free and could be done by making a minimal initial investment. However, volatility can be risky for both, staking and yield farming.
3. Profitability
Yield farming helps to earn greater profits if not affected by volatility. On the contrary, staking provides a steadier annual percentage yield. Defi yield farming platform development solves the purpose of earning greater profits on the investment, without losing peace of mind.
Best DeFi Coins to Invest4. Locking period
Staking helps to earn higher APY for locking the funds for a prolonged duration. Yield farming in decentralized finance has no such requirement.
5. Transaction fees.
Yield farmers have to pay gas fees while switching from one liquidity pool to another, while the stakers don’t have to migrate from one liquidity pool to another, and they can avoid paying gas fees.
Despite the fact that one has to pay the high cost of transactions, people are still showing great interest in yield farming platform development because they are confident about earning a better return on investment.
6. Security.
Yield farming is done with the help of Defi protocols that might be susceptible to cyber security risks or glitches in smart contract coding. Staking is much more secure as compared to yield farming as it is based on a risk-free consensus method.
Choosing the right Defi yield farming development company would help ensure that your smart contracts are completely free of bugs or security loopholes.
Summary
Given the popularity of cryptocurrency and the significant success outcomes of yield farming, there are a plethora of yield farming platforms available online.
It can be challenging to choose the best one, so we have put together this list of the best yield farming crypto tools. We hope you were able to select one to invest in and gain enormous wealth.
FAQ
How much can I earn in DeFi farming?
While yield farming is unquestionably risky, it can also be profitable; otherwise, no one would bother attempting it. Though there might be many different ways of doing yield farming, the best way to compare earnings from different yield farming approaches is through the annual percentage yield.
Well, an Annual Percentage Yield, otherwise known as an APY, is a normalized representation of an interest rate, based on a compounding period of one year.
When it comes to yield farming, your overall profit will also depend on how much cryptocurrency you're able to invest. To be profitable, yield farming requires thousands of dollars of funding.
What is the best cryptocurrency to yield farm?
Users can familiarize themselves with many crypto yield farming platforms. Some of the largest include Binance, Crypto.com and Bybit.
What is the lockup period?
Essentially, the lock-up period is the amount of time you need to leave your coins and tokens while they earn. This is also important when finding some of the top-yield farming platforms since you cannot withdraw your cryptocurrencies that are currently locked up.
What cryptos can you yield farm?
There’s virtually no limit when it comes to what crypto assets can be used to earn interest since any crypto asset can be borrowed to earn interest. Ideally, the best yield farming platforms in crypto offer popular coins that many know and understand.
Before yield farming yourself, it’s best to understand the cryptocurrencies that you’ll be using to earn. This is especially true for non-stablecoin cryptos that can vary in price. Cryptocurrency volatility can be a major factor in your farming earnings.
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Team that worked on the article
Ivan is a financial expert and analyst specializing in Forex, crypto, and stock trading. He prefers conservative trading strategies with low and medium risks, as well as medium-term and long-term investments. He has been working with financial markets for 8 years. Ivan prepares text materials for novice traders. He specializes in reviews and assessment of brokers, analyzing their reliability, trading conditions, and features.
Olga Shendetskaya has been a part of the Traders Union team as an author, editor and proofreader since 2017. Since 2020, Shendetskaya has been the assistant chief editor of the website of Traders Union, an international association of traders. She has over 10 years of experience of working with economic and financial texts. In the period of 2017-2020, Olga has worked as a journalist and editor of laftNews news agency, economic and financial news sections. At the moment, Olga is a part of the team of top industry experts involved in creation of educational articles in finance and investment, overseeing their writing and publication on the Traders Union website.
Olga has extensive experience in writing and editing articles about the specifics of working in the Forex market, cryptocurrency market, stock exchanges and also in the segment of financial investment in general. This level of expertise allows Olga to create unique and comprehensive articles, describing complex investment mechanisms in a simple and accessible way for traders of any level.
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Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets. Her specialties are daily market news, price predictions, and Initial Coin Offerings (ICO). Mirjan is a cryptocurrency and stock trader. This deep understanding of the finance sector allows her to create informative and engaging content that helps readers easily navigate the complexities of the crypto world.