Let's understand what Farming is
Farming is one of the ways to earn in the world of cryptocurrencies and decentralized finance (DeFi). Imagine a farm where instead of growing vegetables or fruits, you earn income by providing your cryptocurrency for various financial operations.
How does farming work?
🔵 Depositing cryptocurrency. First, you need to place your cryptocurrency on a special platform. This is similar to a bank deposit.
🔵 Providing liquidity. When you place your cryptocurrency in a pool, it becomes available to other users. These users can borrow your cryptocurrency or use it for trading.
🔵 Earning rewards. In exchange for providing liquidity, you receive rewards. Rewards can come in the form of interest from transactions, bonus tokens, or other types of compensation. Essentially, this is your earnings for helping the platform function.
Farming in DeFi allows you to earn passive income higher than bank deposits and participate in the new blockchain-based financial world.
The main risks include fluctuations in cryptocurrency prices and potential errors in smart contracts that can lead to loss of funds.
