In this article, you will learn what farming is, why it is needed, and how you can earn from it.

What is Farming?

Farming is an opportunity to earn additional rewards by providing liquidity.

Why is Farming Needed?

Farming is implemented to increase the liquidity in a specific pool. This ensures users can swap tokens without significant price impact.

What is Price Impact?
Price impact occurs when a user makes a transaction that takes up a significant percentage of the pool’s liquidity. This transaction changes the token balance within the pool, causing a shift in price. As a result, during the exchange, you receive fewer tokens than you would based on the current rate.

To avoid this, farming is launched on top of the liquidity pool. Farming offers a much higher APR compared to the existing liquidity pool. The high percentage incentivizes users to provide liquidity.

The more liquidity in the pool, the lower the price impact.

How to Farm?

To start farming, go to the “Pools” tab on STON.fi.

Then select the “Farming” filter. This will display only those liquidity pools with farming enabled.

Let’s assume you see a high APR in a farming pool and decide to give it a try.

Author’s Tip: Psst, the v2 badge indicates that the liquidity pools are built on the latest generation of smart contracts. I wrote more about this, as well as the unique types of liquidity pools STON.fi plans to add to the platform, here.

  1. Go to the desired pool and provide liquidity.

  2. You’ll receive LP tokens in return.

  3. Add these LP tokens to farming and start earning rewards.

Still Have Questions?

No worries!
Check out these detailed guides I’ve written for you 👇

Guide on How to Provide Liquidity on STON.fi
Guide on How to Farm on STON.fi

Important Points About Farming

  1. In some farming pools, LP tokens are locked for a specific period.

  2. Farming rewards may not only be distributed in the tokens you provided as liquidity.

  3. Farming operates for a limited time.

  4. When adding or withdrawing LP tokens from farming, you’ll pay a fee, so it’s essential to always hold some TON in your wallet.

  5. The farming pool’s APR is dynamic and changes as users add or withdraw their LP tokens.

  6. Even while farming, you continue earning a percentage for providing liquidity.

  7. Providing liquidity and farming involve risks of impermanent loss.

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