#explain-card [[Yield farming]] is a strategy in the cryptocurrency space where users lock or lend their crypto assets in [[Decentralized finance|decentralized finance]] ([[DeFI]]) protocols to generate passive income. By providing [[Liquidity]] to platforms such as decentralized exchanges ([[DEX|DEXs]]), lending platforms, or liquidity pools, users earn rewards in the form of additional cryptocurrency tokens. These rewards are typically a combination of interest payments and platform-specific tokens, incentivizing users to participate and support the ecosystem. Yield farming can offer high returns, but it also carries risks such as [[Smart contract|smart contract]] vulnerabilities, impermanent loss, and market volatility. As the DeFi landscape continues to evolve, yield farming remains a popular method for investors seeking to maximize the potential of their crypto holdings.