A veritable craze is going on across all the DeFi world. Automated Market Makers have got in front by providing users with efficient ways to make their crypto assets work. One of them is crypto farming which allows you to get a high interest rate by locking up your crypto for a certain time period.
In this article, I’ll shortly outline the basics on crypto farming and bring you up to speed on the upcoming one-week farming event with rewards in stablecoins on Algebra Finance. Let’s kick things off.
What Is Crypto Farming?
Crypto farming includes locking up your assets for a certain period of time and getting an interest rate on them (APR) or a yield (APY). Some call it “yield farming” or “harvesting”. Crypto farming has turned out to be a highly profitable investment both for short and long terms.
However, crypto farming is not risk-averse as you might be exposed to impermanent loss or price slippage. So, choose crypto assets carefully when going for farming.
How Crypto Farming Works
Let’s quickly scroll through the main steps you should undertake to start farming.
- Firstly, you need to provide liquidity. What does it mean? Simply, you go to an AMM decentralized exchange, choose a pair of tokens, and provide liquidity to this pair.
- Essentially, this pair of tokens comes as your own NFT and you start earning a percentage of trading fees on a platform as soon as you provide liquidity.
- Next, you start farming this NFT. You choose a corresponding farm (temporary or permanent) and lock your tokens for a certain time period.
- Additionally to the trading fees, you start earning APR or APY on farming your tokens.
! Pay attention to risks while choosing a pair of tokens. Impermanent loss can be minimized but not excluded! Check out here how to avoid it.
USDC/MATIC Farm: Stablecoins as Rewards
Algebra Finance, which is a concentrated liquidity DEX on Polygon, is launching a great farming event with stablecoins as rewards, today, at 3 pm UTC. Why is it great?
- As I checked out the conditions, the rewards will be paid out in USDC. When a platform distributes rewards in their native tokens which can obviously drop all of a sudden, it decreases your chances to make a good profit.
- The farming pair is MATIC/USDC which is low-volatile and helps minimizing impermanent loss.
- It will last 1 week so after one week you will be able to enjoy your rewards from liquidity providing and farming altogether.
- The pool size is only $700,000 so anyone who’s willing to participate would be better off entering in the first days. (The last entry day is May 3).
There are a lot of farms going on now on numerous DeFi platforms, however this one comes really advantageous in terms of safety and profitability. If you’re eager to participate, check out their platform.