Overview
The cryptocurrency market is well-known to offer a variety of ways through which profits can be earned. Yield farming has become increasingly popular in many crypto circles as one of the best ways to earn a passive income.
Yield farming allows cryptocurrency investors and traders to put their cryptocurrencies to work on their behalf by providing liquidity to a variety of cryptocurrency trading platforms, exchanges, and protocols.
Liquidity refers to ideal market conditions where assets can be bought and sold quickly without their value being affected, and the cryptocurrency market is one of the most liquid markets alongside the forex market and the stock market, with millions of participants that buy, sell, and exchange digital assets daily.
Yield farmers provide liquidity to these exchanges, platforms, and protocols by staking their coins or locking their coins up with a certain exchange where the coins are borrowed and lent, allowing the yield farmer to earn interest and other rewards in return.
Traders and investors stake stablecoins, which are tokens that are linked to reserve assets, such as the US dollar, or a basket of assets. For example, USDC is a stablecoin that is pegged against the US dollar, which means that 1 USDC is equal to 1 USD, which makes such a digital asset less volatile.
bEarn
bEarn.Fi is a cross-chain yield farming optimizer that grants investors and traders the necessary tools to harness a range of advantages when they stake their crypto investments across decentralized finance (DeFi). bEarn is known for aggregating some of the best farms, auto-market makers (AMMs), lending, and a wide range of other protocols.
These protocols or farms are collated together, allowing bEarn to build the relevant strategies that are inherently semi-automated. This makes yield farming easier and it also reduces gas fees and allows investors to reinvest their returns so that their gains can be maximized.
There is over $290 million (4.2 billion ZAR) liquidity locked up in bEarn.Fi, making it one of the largest protocols in the cryptocurrency space.
Pros and Cons
| PROS | CONS |
| There is a wide range of helpful services offered | There are many concerns about future safety and stability following a recent exploit |
| Offers yield farming strategies and pools with significant Annual Percentage Yield (APY) returns | |
| Low network fees charged | |
| Lucrative profit-sharing scheme offered | |
| Diverse native tokenomics |
PancakeSwap
PancakeSwap is one of the most popular automated market makers (AMM) in the industry and one of the first billion-dollar projects that are featured on the Binance Smart Chain (BSC). Since its inception, PancakeSwap has surged in the Decentralised Finance (DeFi) space, and it experiences 24-hour trading volumes of more than $400 million (5.9 billion ZAR).
At inception, PancakeSwap’s native token CAKE traded at $0.48 (R7.08) and it is currently trading at $22.34 (329.65 ZAR) [2021/09/22]. When investors use PancakeSwap to participate in yield farming, liquidity providers can deposit their digital assets into the liquidity pools hosted by the protocol, allowing them to earn various fees as well as liquidity mining rewards.
When providing liquidity, investors are rewarded with liquidity pool tokens, also referred to as FLIP tokens, that can be staked to earn CAKE. The yield farm pool of PancakeSwap is one of the largest and richest, with more than 10 different pairs that can yield an annual percentage rate (APR) of more than 300%.
Pros and Cons
| PROS | CONS |
| There is a wide range of products offered | There are several high risks involved |
| High returns | There are many crypto scams reported that attempt to copy the protocol |
| Lottery ticket initiative offered | |
| Low transaction fees |
Uniswap
Uniswap is one of the largest and most reputable decentralized exchanges (DEX) that leverages global liquidity pools today. Through this, the protocol can easily facilitate the creation of several unique markets for any pair of crypto assets.
Uniswap uses automated liquidity protocols as the trading model and it is uniquely poised to act as a facilitator in automated trading or DeFi tokens, subsequently simplifying the process involved with buying and selling cryptocurrency pairs and assets.
Uniswap offers an innovative alternative platform that can swap any two assets atop an underlying liquidity pool, if they have been based on the Ethereum blockchain and smart contracts, through this the platform democratizes borrowing and lending on the Uniswap platform.
Pros and Cons
| PROS | CONS |
| The native UNI token is a large-cap asset | Disbursement can lead to decentralization |
| UNI is listed on many cryptocurrency exchanges | The DEX space is a competitive field with many new participants emerging, threatening Uniswap’s position |
| There is no KYC process or verification | The network speed is slow |
| There are consistent upgrades | The protocol is susceptible to crypto news in bullish days as well as bearish seasons |
| The UNI token can be subject to unbalanced demand versus supply |
Aave
Aave is a non-custodial protocol for many liquidity providers and crypto borrowers. With this protocol, users can easily borrow assets, or they can opt for lending AAVE tokens, allowing them to earn compound interest.
Aave is one of the protocols that have the most liquidity locked in, to the value of $21 billion (309 billion ZAR) as of August. When using Aave to provide liquidity, users can expect to earn up to 15% APR when they lend their Aave tokens to borrowers.
Pros and Cons
| PROS | CONS |
| Robust lending pool across a wide range of digital assets | Not as user-friendly as other protocols on this list |
| There are several features available for lending/borrowing | Limited supported crypto wallets |
| The interest rates are stable | Lack of incentives for users to lend/borrow |
| Aave offers flash loans to users | Flash loans have experienced recent exploitation by hackers |
Yearn Finance
Yearn Finance is one of the top-rated in the DeFi space as a platform that was designed and developed on the Ethereum blockchain, inherently known as the home of many smart contracts and decentralized applications (DApps).
Yearn Finance provides its users with some of the highest yields when they lock in their digital assets on the protocol. However, Yearn Finance is more than just a yield aggregator. Yield Finance is also known for its swap pools, ability to short assets, and take out loans as well as insurance policies.
Pros and Cons
| PROS | CONS |
| High return on investments | Not suited for beginners |
| Offers insurance on investments | High risks involved with impermanent loss |
| Offers the ability to borrow against deposits | |
| Facilitates the swap of assets |
Curve Finance
Curve Finance operates through three main routes namely as a stablecoin exchange, a liquidity pool, and yield farming. The Curve Finance protocol website rewards its users when they lock in CURVE coins which subsequently provides the platform with liquidity.
Additional liquidity is also granted when users swap stablecoins which lock in CURVE finance tokens, providing users with the ability to yield curve finance.
Pros and Cons
| PROS | CONS |
| Transaction fees are ultra-low | Risks from separate DeFi protocols |
| Offers the simplicity of smart contracts | High fluctuation in returns |
| There is a reduced risk of impermanent loss | High gas fees |
Venus
Venus is an algorithmic money market that provides decentralized lending/borrowing services to cryptocurrency traders and investors. With the Venus protocol, users can deposit a variety of cryptocurrency assets including ETH, BNB, and many other stablecoins, allowing them to earn interest when they provide liquidity to the protocol and platform.
The interest earned can be used as collateral to borrow more digital assets or users can use it to mint VAI, the Venus native token, and stablecoin.
Pros and Cons
| PROS | CONS |
| Fast transaction speeds | Lack of mobile trading |
| Low transaction fees | XVS cannot be borrowed |
| Rewards for minting VAI | Over-collateralized architecture prevents high trading volumes |
| A popular and robust protocol | The liquidity modules are vulnerable to attack |
Pancake Bunny
Pancake Bunny is a DeFi yield farm and an aggregator that compounds PancakeSwap yields by automatically compounding strategies. Pancake Bunny has over $1 billion (14.7 billion ZAR) lock-in liquidity and the protocol has a lot to offer.
Pros and Cons
| PROS | CONS |
| Automatic compounding offered | Potential competition from other yield aggregators |
| Ability to reinvest profits | Recorded flash loan exploitation suffered recently |
| Wide range of active pools with high APY | |
| User-friendly interface | |
| Cross-chain support offered between BSC and ETH blockchains | |
| Generous returns for $BUNNY holders |
SushiSwap
SushiSwap was established from a fork of Uniswap in September 2025 and a few hours after its launch, it attracted more than $1 billion (14.7 billion ZAR) from Uniswap users. SushiSwap is a DEX that relies on an AMM, using algorithms instead of buyers and sellers to establish pricing.
With SushiSwap, investors can trade against algorithms, pool tokens together, and place them into liquidity pools, making these investors liquidity providers who earn a portion of trading fees for providing liquidity to the protocol and platform.
Pros and Cons
| PROS | CONS |
| A choice in several liquidity pools | User interface and naming schemes can be confusing for beginners |
| Lucrative add-on services offered | |
| SUSHI token holders can earn a portion of trading fees for providing liquidity | |
| Multichain support | |
| Strong commitment to updates |
Autofarm
Autofarm is an active participant in aggregating yields while it facilitates DEX in a hassle-free way on the BSC. Autofarm has grown significantly, and it currently has over $1.04 billion (15.3 billion ZAR) locked-in liquidity.
Autofarm offers yield farming and DEX aggregation tools in addition to offering an intelligent portfolio manager, allowing users to track and manage their holdings on the BSC easily.
Pros and Cons
| PROS | CONS |
| Plethora of yield farming strategies and tools offered | Only compatible with BSC and HECO blockchains |
| Ability to automate DeFi assets and investments | |
| Low trading fees | |
| Deflationary tokenomics used and a burning program for AUTO tokens | |
| DEX aggregator with the best token-swapping rates |
FAQ
What kind of tokens are typically used for yield farming?
Many tokens and stablecoins can be used for yield farming including USDT, USDC, DAI, and many more.
What are the risks involved with yield farming?
There are several including liquidation risks, smart contract risks, price fluctuation risks, gas fees, and more.
What are the benefits of yield farming?
There are many, but one of the main benefits is the significant returns when users become liquidity providers.
What is Yield Farming in Decentralized Finance?
It allows cryptocurrency holders to invest their crypto assets by lending them to others through smart contracts on yield farming protocols, allowing users to earn interest from being liquidity providers.
How are yield farming returns calculated?
Returns are typically annualized using metrics such as the Annual Percentage Rate (APR) and Annual Percentage Yield (APY) to determine returns.
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