#BitcoinBounceBack

Yield Farming

- What it is: It is a strategy in which investors lend or provide liquidity to a DeFi protocol in exchange for rewards, usually in the form of tokens.

How it works:

1. You deposit cryptocurrencies into a liquidity pool (for example, on platforms like Uniswap, Aave, or Compound).

2. In return, you receive reward tokens, which can be native tokens of the platform or other assets.

3. Rewards are usually proportional to the amount and time you keep your funds in the pool.

-Risks: Impermanent loss, token volatility, and security risks in smart contracts.