Yield farming rewards can be rather lucrative, and yield farming has exploded in popularity over the past couple of years as the defi space has grown. Yield farming is an important part of many portfolios, but until recently, yield farming rewards tracking has been complicated due to the lack of appropriate technology.
Dexfolio aims to address this lag in technology with its user-friendly app specifically designed for defi assets, making it easy to track yield farming rewards and stay up-to-date with market trends. With one-tap features for various metrics, it offers a better user experience than many of the current market offerings.
But first of all, what is yield farming and why is it important to track its metrics?
Yield farming is quite simple in principle. It works a bit like putting fiat currencies in a bank account; the account owner deposits money into a pool held by the bank. The bank uses the money for lending purposes and the account owner earns interest as a reward.
In the defi world, crypto holders stake tokens in liquidity pools to earn rewards as a form of passive income. The amount they stake goes into a pool governed by a smart contract which is then available for borrowers to use (although they must also place collateral). Rewards are paid out after an amount of time set in the smart contract.
Rewards may be paid out as a percentage of transaction fees, interest from lenders, or governance tokens.
Yield farming is less risky than day-to-day trading, but as with all investment opportunities, there are pitfalls. Anyone who is thinking of trying it needs to do their research and choose wisely because not all liquidity pools or farming opportunities are equal.
So, how do you go about choosing a suitable opportunity?
Choosing a suitable liquidity pool will depend on your defi portfolio goals and your risk appetite for pitfalls such as impermanent loss. The main liquidity pools began on the Ethereum platform, but there are other options now, such as exchanges on the Binance Smart Chain, so it depends a little on your preference.
There are different types of liquidity pools that you can choose. Single asset liquidity pools are a simple one-asset lending platform, while dual-asset pools are a little more complex and require liquidity providers to stake trading pairs.
In either case, it's important to choose a pool with high liquidity, a good history, and to be aware of the risks. Many users choose pools with stablecoins which offer good returns without the high risks.
So in summary, yield farmers can earn passive income through providing liquidity on a DEX or by becoming a lender. The choice of liquidity pool depends largely on a user's goals and willingness to take risks.
A relative newcomer to the defi scene, liquidity mining has set many investors' hearts on fire with excitement because of the extra rewards it offers. In exchange for staking their tokens, yield farm participants receive additional rewards (usually in the form of governance tokens) as extra incentives.
As with other investments, many factors can affect the value of crypto assets. These can include:
Therefore, it is important to use a tracking tool to track data associated with farming activities. It's easy to make a loss if you don't keep watch on the performance of your tokens, closing positions, pool activity, and other crypto assets. It is crucial to use an app that makes it easy to track your data or you can find your portfolio management to be tedious and time-consuming.
The growth of defi has opened many new opportunities to investors, but it has also added to the complexity required to track important data. Dexfolio offers an industry-leading tracking tool as an alternative to the current app offerings, many of which struggle with lackluster performance in the defi industry. Dexfolio was built for traders, by traders, a strategy which has involved community input and vision to create an app with only the features the community wants. Nothing more, nothing less.
