What is yield farming in DeFi?

Yield framing is the combination of strategies to maximize yields. Yield Farmers invest in a combination of protocols, and pools using different strategies to earn the highest APY. In some cases, the APY can be as high as 100% which is impossible to imagine n traditional finance. Some yield farmers leverage by burrowing and reborrowing from several protocols to increase the funds at their disposal, thus maximizing their yield. Others do LP mining or invest in platforms that offer additional rewards in LP tokens which can actually command more value in the market depending on the reputation of the platform. In such cases, yield farmers are willing to lose their initial capital to earn the LP tokens simply because they are more valuable. Other strategies include the now popular crop rotation strategy which involves moving funds across several protocols or pools to maximize yield. The risks vary with the strategy used by the farmer to maximize yields. Leverage may result in significant losses if the position is liquidated based on market volatility. LP tokens may not be as valuable leading to some losses for investors. Hedging may also be used to protect the investor against these risks.