Is yield farming for interest capital gains worth it?
Asked 4 years ago
Hi, I've been looking for a crypto trading strategy that has minimum counterparty risk, is easy to get the hang of, and needs little capital investment. I discovered yield farming which looks great. However, I am a bit nervous when it comes to lending into liquidity pools and relying on the liquidity for interest gain. Am I understanding this correctly? How much risk is actually involved?
Filip Dimkovski
Sunday, September 18, 2022
Yield farming is not a risk-free way to earn passive income. When you deposit your crypto to a liquidity pool, you actually deposit it to a crypto protocol (like Aave or Compound). Although it doesn't happen to reputable protocols, the protocol can get attacked and your funds could get stoled by an attacker. If you want a safer option with potentially smaller returns, I'd recommend staking your crypto. A good place to start is a CEX like Binance, Nexo, and Coinbase.
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