Yield Farming
Yield farming is a decentralized finance (DeFi) strategy where users provide liquidity to protocols—such as Solana-based DEXs and lending platforms—in order to earn rewards, which can include trading fees, governance tokens, and airdropped assets. It is central to maximizing returns in the DeFi ecosystem but carries specific risks tied to volatility and smart contracts.
Yield Farming: what is it?
Examples
- 1
Supplying SOL/USDC to an Orca double-dip pool, earning ORCA incentives plus trading fees.
- 2
Farming on Raydium by staking LP tokens into “dual yield” farms that pay out project tokens and RAY rewards.
- 3
Auto-compounding vaults on Meteora that re-invest earned yields, boosting APY for set-and-forget users.
Common Use Cases
Pro Tips
Always review yield sources, APY calculation methods, and risk factors before joining a farm.
Beware of impermanent loss—more volatile pairs can potentially eat into reward gains.
When possible, use audited protocols with reputations for security and clear reward tracking.