The practice of deploying tokens across DeFi protocols to maximize returns through trading fees, lending interest, and token incentive rewards. Farmers often move capital between protocols chasing the highest APY. On Solana, common strategies include LP provision on Orca/Raydium, lending on Kamino/MarginFi, and staking LP tokens in reward farms.
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The practice of deploying tokens across DeFi protocols to maximize returns through trading fees, lending interest, and token incentive rewards. Farmers often move capital between protocols chasing the highest APY. On Solana, common strategies include LP provision on Orca/Raydium, lending on Kamino/MarginFi, and staking LP tokens in reward farms.
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Think of it as a market mechanic used to price, route, or move capital through liquidity apps.
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AMMs, routing, liquidity, lending, and trading infrastructure.
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Yield Farming (yield-farming) Category: DeFi Definition: The practice of deploying tokens across DeFi protocols to maximize returns through trading fees, lending interest, and token incentive rewards. Farmers often move capital between protocols chasing the highest APY. On Solana, common strategies include LP provision on Orca/Raydium, lending on Kamino/MarginFi, and staking LP tokens in reward farms. Related: Liquidity Pool, Staking
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A smart-contract-held reserve of two or more tokens that enables trading via an AMM. Users deposit token pairs in specified ratios to become liquidity providers and earn trading fees. Pools are identified by their token pair and fee tier. Pool depth (total value locked) determines price impact for trades.
The process of locking cryptocurrency as collateral to participate in network consensus (validation) or to earn rewards. Stakers either run validators directly or delegate to existing validators. Staking provides economic security—validators risk losing staked tokens (slashing) for misbehavior. Annual staking yields typically range from 3-15% depending on the network.
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A protocol that automatically allocates user deposits across multiple DeFi strategies to optimize yield. Yield aggregators monitor rates across lending protocols, liquidity pools, and staking programs, rebalancing capital to the highest-returning opportunities. On Solana, Meteora dynamic vaults and Tulip Protocol serve as yield aggregators, abstracting strategy management and auto-compounding returns for depositors.
Graph showing interest rates across different maturities for comparable debt. Normal curve slopes upward (longer = higher yield). When inverted (short > long), short-duration tokenized T-bills offer higher yields, explaining their dominance in Solana RWA.
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A smart-contract-held reserve of two or more tokens that enables trading via an AMM. Users deposit token pairs in specified ratios to become liquidity providers and earn trading fees. Pools are identified by their token pair and fee tier. Pool depth (total value locked) determines price impact for trades.
The process of locking cryptocurrency as collateral to participate in network consensus (validation) or to earn rewards. Stakers either run validators directly or delegate to existing validators. Staking provides economic security—validators risk losing staked tokens (slashing) for misbehavior. Annual staking yields typically range from 3-15% depending on the network.
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A protocol that enables token swaps using algorithmic pricing against pooled liquidity instead of matching individual buyers and sellers. AMMs use mathematical formulas (typically constant product x*y=k) to determine prices based on the ratio of tokens in a liquidity pool. On Solana, major AMMs include Raydium, Orca, and Meteora.
An AMM design where liquidity providers concentrate their capital within specific price ranges instead of across the full 0-to-infinity range. CLMMs dramatically improve capital efficiency—LPs earn more fees per dollar deposited within their active range. If the price moves outside the range, the position becomes inactive. Orca Whirlpools and Raydium CLMM are leading implementations on Solana.
A smart-contract-held reserve of two or more tokens that enables trading via an AMM. Users deposit token pairs in specified ratios to become liquidity providers and earn trading fees. Pools are identified by their token pair and fee tier. Pool depth (total value locked) determines price impact for trades.
A token issued to liquidity providers representing their proportional share of a pool's reserves and accrued fees. LP tokens can be burned to withdraw the underlying assets. The value of LP tokens changes as the pool's token ratios shift and fees accumulate. LP tokens are often stakeable in yield farming programs for additional rewards.