Yield farming vs Staking

[Abiky]

I've came across "yield farming" which looks quite similar to staking. You basically go on a "hunt" for "De-Fi" platforms which offer the best rates for your stablecoin (or token) holdings. This is done in a non-custodial manner through the use of smart contracts. On staking, I can basically "delegate" my coins to a validator and earn daily income.

What I want to know is if "yield farming" is better than staking. An overview of the advantages/disadvantages between the two would be nice. Any clarifications would be greatly appreciated. Thanks in advance.

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[Ojima-ojo]

I've came across "yield farming" which looks quite similar to staking. You basically go on a "hunt" for "De-Fi" platforms which offer the best rates for your stablecoin (or token) holdings. This is done in a non-custodial manner through the use of smart contracts. On staking, I can basically "delegate" my coins to a validator and earn daily income.

The question is,  do the validator you delegates your coins to have access to the wallet since it is a smart contract,  because what we are trying to separate is custodial and none custodial which also represents the freedom by both you and the smart contract on the control of the connected wallet.


So this ball down to the same thing which is,  centralization/control over your coins.

What I want to know is if "yield farming" is better than staking. An overview of the advantages/disadvantages between the two would be nice. Any clarifications would be greatly appreciated. Thanks in advance.

As far as I know,  both yield farming and staking involve one thing which is the loss of control of your coins but the difference is that,  in staking,  you have to send your coin out of your wallet to the API smart contract address on the platform,  but in yield farming, you does not need to send your coins to a smart contract but have to grant access to them through wallet connect using a smart contract.


The similarity between both of them is that,  there has equal access to the control of the assets you provided for qualities so a scam smart contract can go away with your coins at any time.

[rat4]

By staking you contribute to the security of a blockchain, and this is good.
By lending you contribute to the liquidity of a market, and this is good.

One man's meat is another man's poison.

[Ultegra134]

Both processes are quite similar, as other users have already suggested, with the main difference being that staking is focused on earning rewards for holding and validating transactions on a blockchain network, while yield farming and liquidity mining are focused on providing liquidity to decentralized exchanges and liquidity pools to earn rewards. Both sound way too similar, and to be honest, the result is practically the same for the end user. As someone who has been active in liquidity mining and staking and has participated in both investment types in the past few years, I never distinguished any differences and also believed that it's practically the exact same thing. Both options share the same risks regarding smart contracts, vulnerabilities, exploits, and impermanent loss.

[Bitstar_coin]

The main goal is earning a reward in which ever route you chose to take. To me, yield farming will be a better choice ( i.e providing stable coins liquidity to a pool) especially in the bear period. Staking is also good but most staked coins tends to lose their value as a result of market downtrend. And this can hinder the amount of profit that could have been made.  They both have more similarities but slightly difference left for users to figure out.

[o48o]

I've came across "yield farming" which looks quite similar to staking. You basically go on a "hunt" for "De-Fi" platforms which offer the best rates for your stablecoin (or token) holdings. This is done in a non-custodial manner through the use of smart contracts. On staking, I can basically "delegate" my coins to a validator and earn daily income.

What I want to know is if "yield farming" is better than staking. An overview of the advantages/disadvantages between the two would be nice. Any clarifications would be greatly appreciated. Thanks in advance.

Better how? They are build for completely different reasons, other one is keeping chain secure and other is being a liquidity provider. I don't think they are comparable in any other form than their APY

With staking your money is relatively safe, and while yield farming might give you way more APY, but at the same time your money is far from safe as there's a risk of impermanent loss. Not to mention possible DeFi protocol code vulnerabilities.

[SlimShadyMmp]

I think Yield Farming have to do with providing liquidity to a pool and then staking your LP token to get more of the platform token based on APY Yield-farming on new project might actually be profitable because mostly they offer high apy Just make sure you are following a good project to have enough of the coins to hold for some pump to come Staking is mostly an L1 or L2 where validator stake to secure the netowrk

[AmoreJaz]

I think Yield Farming have to do with providing liquidity to a pool and then staking your LP token to get more of the platform token based on APY Yield-farming on new project might actually be profitable because mostly they offer high apy Just make sure you are following a good project to have enough of the coins to hold for some pump to come Staking is mostly an L1 or L2 where validator stake to secure the netowrk

the profitability in yield farming is indeed reliant on the token or project itself. there are so many combinations that you can select from this, but it is advisable to provide liquidity in a more familiar and popular market like the top bsc tokens like for example going into yield farming in pancake swap. you can already see the APY for each pair you will choose. staking is basically just earning rewards while holding your coins. yield farming depends also on how much percentage you have in the liquidity pool. if it is small, then don't expect that you will get a bigger share.

[taufik0911]

I've came across "yield farming" which looks quite similar to staking. You basically go on a "hunt" for "De-Fi" platforms which offer the best rates for your stablecoin (or token) holdings. This is done in a non-custodial manner through the use of smart contracts. On staking, I can basically "delegate" my coins to a validator and earn daily income.

What I want to know is if "yield farming" is better than staking. An overview of the advantages/disadvantages between the two would be nice. Any clarifications would be greatly appreciated. Thanks in advance.

Both strategies offer opportunities to earn passive income in the crypto space, but there are some important distinctions to consider. Let's dive into it!

Yield farming involves seeking out decentralized finance (DeFi) platforms that offer attractive rates of return for your stablecoin or token holdings. It often requires actively moving your funds across various platforms to maximize returns. The process is facilitated through smart contracts, allowing you to earn additional tokens as rewards for providing liquidity or participating in specific DeFi protocols.

On the other hand, staking involves delegating your coins to a validator on a blockchain network. By doing so, you contribute to the network's security and consensus mechanism, and in return, you earn regular rewards. Staking often requires locking up your funds for a specific period, during which they cannot be readily accessed.

Now, let's discuss the advantages and disadvantages of both strategies.

Advantages of yield farming:

1. Higher potential returns: Yield farming can offer significantly higher returns compared to traditional staking, especially during periods of high market activity.
2. Flexibility and diversification: You have the freedom to explore various DeFi platforms, seeking the best yields and diversifying your investments across different protocols.
3. Access to new tokens and projects: Yield farming can provide early access to new tokens and projects, potentially allowing you to participate in their growth from the early stages.

Disadvantages of yield farming:

1. Higher risk and complexity: Yield farming involves navigating multiple platforms, smart contracts, and protocols, which can be more complex and risky than traditional staking.
2. Volatility and impermanent loss: The value of the tokens you provide as liquidity can fluctuate, and there is a risk of impermanent loss if the value of the tokens changes significantly during your farming period.
3. Gas fees: Transaction fees on Ethereum or other blockchain networks can be high during times of congestion, affecting your overall profitability.

Advantages of staking:

1. Simplicity: Staking is often more straightforward than yield farming, as you delegate your coins and let the validator handle the technical aspects.
2. Lower risk: Staking typically carries lower risk compared to yield farming, as your funds are locked in a secure consensus mechanism and not subject to the same market volatility.

Disadvantages of staking:

1. Lower potential returns: Staking rewards are generally more stable but may offer lower returns compared to yield farming.
2. Limited flexibility: While staking, your funds are locked for a specific period, and you may not have immediate access to them if the need arises.

Ultimately, the choice between yield farming and staking depends on your risk appetite, technical understanding, and investment goals. If you're comfortable with the higher risks and complexities associated with yield farming and actively managing your investments, it may be worth exploring. On the other hand, if you prefer a more straightforward and stable approach, staking might be a better fit.

It's important to conduct thorough research, consider the risks involved, and stay updated on the latest developments in both yield farming and staking. This will help you make informed decisions aligned with your financial objectives.

[Husires]

I've came across "yield farming" which looks quite similar to staking. You basically go on a "hunt" for "De-Fi" platforms which offer the best rates for your stablecoin (or token) holdings. This is done in a non-custodial manner through the use of smart contracts. On staking, I can basically "delegate" my coins to a validator and earn daily income.

The main difference is that in yield farming, the money must leave your wallet, whether by sending it to a third party or closing it in a smart contract, where this money is used as a loan and this loan gives a return, while in staking the coins may not leave your wallet as keeping the coins at an address enables you to be validator and get the transaction fee or variable return according to the network completely in Cardano.

Yield farming is very risky because it is a loan and there are no guarantees of getting your money back,  you are taking risks in return for promises of achieving a return. These promises may not be fulfilled while staking is less risky but less return, and the higher the return from the currency, the lower in USD.

Yield farming can be hacked or bankruptcy while in staking token value can go down.

[adaseb]

Yield farming is so 2020 or 2021. Back then you had these projects claiming 1% per day of profits. You would own the token, which yield 1% but overall lost 50% of its value in a month. You were paid in the token not in fiat so it was an overall loss.

Then you had that IL when some whale would dump a huge amount of tokens which exceeded the pools capacity and you would be at a loss.

Staking more or less died in 2022 when all those lending platforms went belly up. Now people just yield with their savings account in the US.

[vv181]

Better in terms of what? You are just asking like does car is better than a motorcycle, without defining the specific aspect to compare. Both things might get you from point A to B, but which one is faster or safer is a consideration that you miss.

Technically, yield farming and staking is not pretty similar. Nevertheless, if we strictly speak about the reward without thinking about what it actually does, in terms of risk factors, yield farming has more risk exposure compared to staking. Thus it makes the notion about the riskier thing that you do, the more reward potential, applies to both of these things.

[electronicash]

when your tokens leave your wallet, it definitely is not yours anymore and this is required when you are yield farming and staking. something that we always want to avoid so the saying goes "not your keys, not your coins".  yielding using the stablecoin has been scary since the time of luna.

but we are still interested to send out coins though all for the money we can make when apy is attractive. 

[nicolas222]

Let's say that in some way they are equivalent you just need to look for the highest odds, staking and lending are usually offered, proposed by the cex, the yeld and offering liquidity are on the dex / defi

[kaseygriffin]

I've came across "yield farming" which looks quite similar to staking. You basically go on a "hunt" for "De-Fi" platforms which offer the best rates for your stablecoin (or token) holdings. This is done in a non-custodial manner through the use of smart contracts. On staking, I can basically "delegate" my coins to a validator and earn daily income.

What I want to know is if "yield farming" is better than staking. An overview of the advantages/disadvantages between the two would be nice. Any clarifications would be greatly appreciated. Thanks in advance.

Actually I see both of these forms in the defi environment have their positives and negatives, so comparing which is better than the other doesn't seem to me too much of an opinion. It seems that the few that have maintained sustainability, the rest are all short-term things and come with trends in this market to hit the psychology of knowledge diversity along with the theory of technology or utility, for me, I also tried some products but honestly I don't spend too much time on these forms.

[youdacapt]

I've came across "yield farming" which looks quite similar to staking. You basically go on a "hunt" for "De-Fi" platforms which offer the best rates for your stablecoin (or token) holdings. This is done in a non-custodial manner through the use of smart contracts. On staking, I can basically "delegate" my coins to a validator and earn daily income.

What I want to know is if "yield farming" is better than staking. An overview of the advantages/disadvantages between the two would be nice. Any clarifications would be greatly appreciated. Thanks in advance.

• A way to keep it simple is by saying that Yield farming involves providing LP contract (any token x usdt/bnb/eth etc) then in turn earn rewards daily depending on the allocated APY rewards. Also, You can join yield farming at any top decentralized exchanges such as pancakeswap, uniswap etc; or join yield farming at any tokens that offers such on their platform.

Yield farming disadvantage would be irreparable loss, double loss (because you provide a pair of 2 tokens in an LP)
Yield farming advantage would be high earning rate from the pool, the bigger your LP, The bigger the earnings daily.

• Staking is also good, all you have to do is deposit the tokens into a staking pool and you can earn proceeds regularly from the staking pool depending on the APY of the staking pool contract; the bigger the tokens you stake, the bigger % you earn daily.

Staking advantage would be that, if things turn south; your loss would only be "that token staked", compared to Yield farming where you lose the tokens and your stables. Also with staking, you can increase your total holdings if you plan to hold long term.
Staking disadvantage meanwhile is that you could miss the opportunity to sell your tokens at a good price; if pump takes place when you are locked in staking

[blockman]

I've came across "yield farming" which looks quite similar to staking. You basically go on a "hunt" for "De-Fi" platforms which offer the best rates for your stablecoin (or token) holdings. This is done in a non-custodial manner through the use of smart contracts. On staking, I can basically "delegate" my coins to a validator and earn daily income.

What I want to know is if "yield farming" is better than staking. An overview of the advantages/disadvantages between the two would be nice. Any clarifications would be greatly appreciated. Thanks in advance.

Both of them earn you passively but in yield farming, there's the reason why you're putting your asset into a platform and just like the banks, they're using it for some other usage like lending or using it with their investments. While in staking, you're helping the network of that token of yours. It's true that in yielding, there's more risk than of staking so if it's all about profitability, you'll never know as both of them changes dramatically overtime depending on the situation of their own networks and projects.

[Doan9269]

I've came across "yield farming" which looks quite similar to staking. You basically go on a "hunt" for "De-Fi" platforms which offer the best rates for your stablecoin (or token) holdings. This is done in a non-custodial manner through the use of smart contracts. On staking, I can basically "delegate" my coins to a validator and earn daily income.

What I want to know is if "yield farming" is better than staking. An overview of the advantages/disadvantages between the two would be nice. Any clarifications would be greatly appreciated. Thanks in advance.

They are only similar to each other but obviously not the same thing, if you're staking, then you're taking a particular leverage position with the corporation or project you're dealing with and have right to handle a particular portion of bond in your own capacity assigned to you base on your stake amount or contributions, yield farming is like you investing on a particular project that you perform some particular daily task to be rewarded with some incentives in any currency form.

[TastyChillySauce00]

Yield farming sounds like ponzi for me. The reward generated from allocating some tokens as reward for its famers. The problem is yield farming is offering non sense reward unlike staking which has been offering sense reward.

The problem is how sustain yield farming compared with staking. I will prefer to go to staking instead of yield farming.

[AbuBhakar]

What I want to know is if "yield farming" is better than staking. An overview of the advantages/disadvantages between the two would be nice. Any clarifications would be greatly appreciated. Thanks in advance.

Yield Farming is another Form of Staking because you can farm yield by Staking on Liquidity etc. They are the same with just multiple number of other use case. Staking is now the term use on DeFi for farming and not only from it’s original use of delegation. Staking on DeFi is now more frequent to use rather than staking on blockchain for validation.

Yield farming on your context includes a lot of risk but also produce high yield while Staking is safe if you stake on trusted validator but slow return. I will go for DeFi staking if you will do this in short term investment.