Is yield farming stablecoins safe?
Asked 4 years ago
I'm always wary about investing in cryptocurrency because I don't know how safe/stable it is to rely on it. Maybe I'm old-fashioned that way. My son has recently started yield farming stablecoins. Is this a safe venture?
Josiah Makori
Thursday, May 19, 2022
While you can make more profits by yield farming with standard crypto like Bitcoin, you are faced with the risk of impermanent loss. This is every yield farmer’s worst nightmare. However, when you farm using stablecoins, you significantly minimize the risk.
Since stablecoins are pegged to fiat currency and commodities, their value remains stable throughout. For instance, when Bitcoin and altcoins fell considerably recently, stablecoins dropped marginally (about 0.45 to 0.3%) and recovered in time. Therefore, yield farming stablecoins is safe as you will mitigate the risk of impermanent loss and make profits of around 10% of your funds.
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