Learn where yield comes from and why it can disappear fast.
Definition
Yield farming is moving funds to earn fees, interest, or incentives. Yield is real only if you can exit safely.
Where yield comes from
- Borrowers paying interest.
- Trading fees.
- Token incentives for liquidity.
Risks beginners miss
- Reward token price can fall.
- Smart contract bugs.
- Impermanent loss.
- Liquidity can disappear.
Practical filter
If you cannot explain the source of yield, do not chase it.
Warning
APY screenshots are marketing. Your net return depends on price changes and exit conditions.
Quick quiz
- Name one source of yield.
- Name one farming risk.
- State one practical filter.