Risk And Benefit Of Yield Farming
The blockchain and cryptocurrency communities have embraced decentralized finance in large numbers. In less than four months, the total funds locked in Defi have risen from $1 billion in early June 2020 to about $8.4 billion. Many people are comparing it to the excitement surrounding initial coin offers (ICOs) in 2017. Unlike most ICOs, which lacked a solid product to back them up and went bankrupt quickly, the Defi projects have provided enormous value to their users. In comparison to traditional financial institutions, most Defi projects are lending and borrowing protocols that offer rapid loans and lower interest rates. Defi lending and borrowing processes, on the other hand, do not rely on an intermediary to sanction loans, unlike traditional banks. Users on these Defi platforms engage in yield farming in order to give loan cash to borrowers on the site in a decentralized manner. To get the best interest rates, the yield farmers move their cash from one pool to the next. ·