1/10 What is yield farming?
Now that you understand staking, let's explore other ways that you can earn rewards on your $LUNA. One of the
ways for you to do that is through yield farming!
Let's explore! 🧵👇🏻
$LUNA $UST @terra_money #Terra #Lunatics
Now that you understand staking, let's explore other ways that you can earn rewards on your $LUNA. One of the
ways for you to do that is through yield farming!
Let's explore! 🧵👇🏻
$LUNA $UST @terra_money #Terra #Lunatics
2/ First of all, what is yield farming?
Yield farming aka liquidity mining is another way of earning more rewards on your $LUNA.
It can be compared to staking. But behind the scenes, yield farming is actually more complicated than staking.
Yield farming aka liquidity mining is another way of earning more rewards on your $LUNA.
It can be compared to staking. But behind the scenes, yield farming is actually more complicated than staking.
3/ Yield farming is where you provide liquidity by supplying a pair of assets like $LUNA and $UST to a liquidity pool!
This makes you a liquidity provider.
This makes you a liquidity provider.
4/ What does being a liquidity provider mean?
In the finance world (TradFi), when you buy and sell on your brokerage app, someone has to sell and buy from you.
This is typically the Market Makers (MM), and they require a license in order to do so, which us folks won't have.
In the finance world (TradFi), when you buy and sell on your brokerage app, someone has to sell and buy from you.
This is typically the Market Makers (MM), and they require a license in order to do so, which us folks won't have.
5/ MMs usually take a small fee either directly or indirectly for every trade that they help execute.
This can be highly lucrative if there is a ton of volume traded.
Similar to an exchange like @binance, a small fee is charged whenever you perform a trade.
This can be highly lucrative if there is a ton of volume traded.
Similar to an exchange like @binance, a small fee is charged whenever you perform a trade.
6/ Without MMs, the liquidity is thin because they won't be on the other side buying and selling from you, and thin liquidity causes price slippage for big orders.
Slippage is when you're buying an asset and the price moves away from the market price as you eat up the liquidity.
Slippage is when you're buying an asset and the price moves away from the market price as you eat up the liquidity.
7/ How is this related to DeFi and Yield Farming?
In DeFi, there are no licensed centralized market makers, so who provides liquidity? The beauty of DeFi is that anyone can!
You simply need to hold 2 assets, typically a volatile one and a stable one such as $LUNA and $UST.
In DeFi, there are no licensed centralized market makers, so who provides liquidity? The beauty of DeFi is that anyone can!
You simply need to hold 2 assets, typically a volatile one and a stable one such as $LUNA and $UST.
8/ Next go to a DEX (decentralized exchange) and provide your asset there as a liquidity pair.
When others trade through your liquidity pair you will start to earn trading fees!
Isn't that amazing? Your idle assets can generate you additional returns!
When others trade through your liquidity pair you will start to earn trading fees!
Isn't that amazing? Your idle assets can generate you additional returns!
9/ A DEX, like @astroport, would often give additional incentives to attract liquidity providers like yourself onto their platform.
This gives us double rewards on top of receiving a % of trade fees. We are also rewarded with extra rewards, usually the DEX token, such as $ASTRO.
This gives us double rewards on top of receiving a % of trade fees. We are also rewarded with extra rewards, usually the DEX token, such as $ASTRO.
10/ Rewards and incentives allow yield farmers to earn interest on their assets.
Farming rewards can provide you with small but substantial income that allow you to enjoy good food such a great cup of coffee without worries.
Farming rewards can provide you with small but substantial income that allow you to enjoy good food such a great cup of coffee without worries.
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