Yield farming gives people the chance to earn interest - fixed or variable - by placing funds in the DeFi (Decentralised Finance) protocol. It is different from buying or selling a digital asset. In the case of yield farming, the investor borrows his digital assets through the platform, obtaining a return that ultimately results from the payment of bonuses for the assets by borrowers.

For example, a farmer can borrow ETHs on Compound and earn money based on how much Compound charges borrowers with ETH loans.

To start yield farming, you have to pay for the game. If you only throw in a few hundred dollars, the fees will probably overshadow any earnings you realize. However, with larger investments, the rate of return may be more than enough to cover the fees, allowing you to make steady profits.

How does yield farming work?