Yield farming vs Staking

[Xal0lex]

In my opinion, staking is more reliable when it comes to staking known coins. Yield farming is often accompanied by earning new tokens by delegating your valuable tokens, such as ETH. Whether those new tokens that are given to you as rewards will have any value is a big question, plus those tokens are often hard to sell due to lack of liquidity or they have high slippage. I would choose staking.

Staking is always better. But you could lose your investment overnight due to volatile market prices. It's like Yield Farming where you "lend" stablecoins to a "De-Fi" protocol. These coins usually maintain their 1:1 peg to the USD, so there's a minimal chance you'll lose it all in an instant.

Stakers who bought the asset for staking at current market prices, when the coin itself had already managed to grow many times, are most often exposed to such a risk.

Nothing is perfect, so I'd just do both of them (yield farming and staking) to keep the passive income flowing. This is still better than saving money at a bank. As long as decentralization is preserved, people will be able to earn from either staking or yield farming without restrictions. Who knows if "De-Fi" will replace "Ce-Fi" in the future?

To be honest, I wouldn't do any of those things. Unless you have cheap tokens available, which you need for steaking or for the yield farming

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[Blitzboy]

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. 

You make a crucial point that cuts to the heart of one of crypto's biggest problems. Its like being trapped. APYs are tempting, but you risk losing token control. Financial markets face this dilemma regularly. Banks and financial corporations are trusted to double our money. Yield farming offers great returns at significant risk. Purists prefer control over yield, thus "not your keys, not your coins" makes sense.

Yield farming with stablecoins - or any token - may not be as dangerous as some claim. Many DeFi platforms feature strong security. While mistrust is warranted, would it be wise to miss out on prospective advantages owing to an overblown fear of loss?

[nelson4lov]

Yield farming with stablecoins - or any token - may not be as dangerous as some claim. Many DeFi platforms feature strong security. While mistrust is warranted, would it be wise to miss out on prospective advantages owing to an overblown fear of loss?

There's no zero risk yield farming available in the DeFi space. Even the popular liquidity mining and Liquidity programs offered by DeFi projects have more implications than the strong security of the platforms in question. It's true that there's been plenty of hacks in the past but most project have started taking security seriously which has led to the rise of smart contracts audit but then, the yield farming part, there's still no viable solution that would allow users to earn yields as advertised.

IIRC, there's a report recently that shows that most LP providers usually end up in net-negative due to continously decline of the underlying protocol token value.

[asawale]

Base on my understanding, staking is mostly locking your token or coin through a contract address to earn interest. Yield farming on the other comes with first adding liquidity on a smart contract and then stake the liquidity pool for additional reward. Earning that one gets from yield farming is quite more than than of staking.

[Abiky]

Base on my understanding, staking is mostly locking your token or coin through a contract address to earn interest. Yield farming on the other comes with first adding liquidity on a smart contract and then stake the liquidity pool for additional reward. Earning that one gets from yield farming is quite more than than of staking.

If we're talking about current staking models, then you're correct. But old-fashioned staking works in a completely different way. You just run the wallet software yourself and leave it running 24/7 to earn coins along the way. That is assuming you have a minimum number of coins required for staking. This approach is much more decentralized than "lending" your coins to a validator or staker to earn rewards.

Most modern PoS coins have this model (lending), adding more risk to your investment than necessary. Yield farming, is a much better option because you'd only need to trust a smart contract. You usually lend your stablecoins to a "De-Fi" platform such as Aave or Compound.Finance to earn money over time. There's no risk involved if the platform itself has been audited and tested before launch. Ultimately, you'd need to leverage both methods advantages/disadvantages to get what you want. As long as you don't invest more than what you can't afford to lose, there should be nothing to worry about. Just my thoughts