Welcome back my fellow readers,

it's you GreenPanda here with another chapter of our super saga. 

Be sure to be updated for the best experience. Don't miss the previous chapter ! :)

FIRST CHAPTER HERE.

Create a passive income with our money is the most appealing thing in the world, watching them grow while have a good cup of tea with delicious biscuits... can you imagine ? In these days, using technologies that surround us in the right way, making money from money is more reliable than decades ago and WE MUST TAKE ADVANTAGE OF IT, as soon as possible. We already covered the DEX topic, now let's dive into STRATEGIES !

THE THREE TYPES OF YIELD FARMERS.

First of all, who are the farmers ? Farmers are, like me, web3 users that make them money grow (like vegetables and plants, that's why the word "Farmers") using liquidity pools, staking pools, lending pools, farming pools. As farmers, we need to see them as lands to cultivate, grounds where plant our seeds and take care of them. What is the Yield ? Yield is the income returned or received from an investment and usually we can see it as a percentage % based on amount of time: it can be daily, monthly or annual. The most common Yield is the APY that, in facts, stands for Annual Percentage Yield. Now let's marry the words Yield and Farmers together, and the "game" can start. 

Depending on our spirit, our will and our FUD sentiment handling, in my experience the farmers can be divided into THREE main categories.

• 1. RELAXED FARMER. 

  Do you wanna earn a constant passive impactful for the long term income without the need to constantly look at the performance of the "growing plants" and avoid stress ? Well, you're definetely a relaxed farmer. Buy the seeds, find the most fertile land and plant them. The best choice for you is STAKING.

  What is staking ? Staking refers to the process of participating in the validation of transactions on a blockchain for certain cryptocurrencies that use the Proof of Stake consensus mechanism. You can easily lock or "stake" your assets for get the chance to be chosen as a validator for new blocks of transactions. The probability of being chosen can be different from farmer to farmer because it depends on the amount of crypto staked and other factors specific to the blockchain. When chosen as a validator, the farmer helps maintain the blockchain's security and integrity by validating and adding new transactions or blocks. In return, they RECEIVE REWARDS, typically in the form of additional cryptocurrency. This is similar to EARNING INTERESTS OR DIVIDEND. You can stake your crypto in different ways: lock up them for a fixed period and for that period they're not usable; the flexbile way, with a lower APY but with the possibility to unlock your funds whenever you want; last but not least, stake them and receive, at the time of staking, an amount of Staking Token equal in value to your staked amount, and with those token you can do whatever you want: when you want to unstake your funds, just swap the amount of Staking Token for your crypto locked. THIS TYPE OF FARMING IS A SLOW, LESS RISKY AND GOOD WAY FOR EARN A PASSIVE INCOME WITH YOUR INVESTED FUNDS.

• 2. BALANCED FARMER. 

  For you, have a slow income is not enough but at the same time you don't wanna lose your hair catching that high APY pool. Here enter in the game what I call the "Think about it, but take a nap in the middle" strategy. Staking is boring for you, yes you're earning but... come on, we can do better.

  What I suggest for you is an AUTO-REBALANCING DOUBLE ASSET LIQUIDITY POOL.

  What is a Liquidity Pool ? A liquidity pool is a MUST in DeFi ecosystems and platforms, mostly in decentralized exchanges. These pools are collections of funds locked in a smart contract used to facilitate trading by providing liquidity. They are used for swapping between different tokens. When someone wants to trade one token for another, they can do so using the pool, and the exchange rates are determined by the relative size of the two tokens in the pool.

  How it works ? Liquidity providers (US, "THE FARMERS" or technically "LPs") deposit their tokens into a pool by signing a smart contract and typically receive liquidity pool tokens (the same as Staking) in return, representing their share of the pool. These tokens (LPTs) can be staked or used in other DeFi ecosystem to earn additional yields.

  Why Double Asset ? Because this pool contains two or more different cryptocurrencies. The most common format is a pair of assets, such as ETH and a stablecoin like USDC (also the most safe choice, I will explain later why).

  Why Auto-Rebalancing ? Usually in normal liquidity pools, in addition to the volatility of the assets, there will the risk of "impermanent loss". This occurs when the price of the deposited tokens changes compared to when they were deposited. The more the price divergence is large, the more the liquidity provider could lose in terms of opportunity cost compared to just holding the tokens. Auto-rebalancing liquidity can solve this issue by automatically adjusting the composition of the pool to maintain a constant ratio of tokens. The goal is to reduce the risk of impermanent loss for the farmers.

  How can be reduced the more the risk of impermanent loss ? BY ADOPTING AN AUTO-REBALANCING DOUBLE ASSET LIQUIDITY POOLS with a STABLECOIN-COIN PAIR, because by pairing a stablecoin (whose value is tied to a stable asset like $USD) with a cryptocurrency, the overall volatility of the pool is reduced compared to a pair of two volatile cryptocurrencies. At this point, the crucial decision IS YOURS. If the market rise, having a COIN-COIN pair can be more and more profitable than a STABLECOIN-COIN pair. If the market collapses, is way far more risky. Choose a path based upon your knowledge and your "monitorize the market" skill.

• 3. AGGRESSIVE FARMER. 

  Here we are. It's my turn. Things in here are way more risky and 100% more profitable, prepare your glue and put it on the chair and don't take a nap! Trust me. When you start to see the income second by second while your locked tokens keep growing, having a nap or go eat potato chips is your last priority.

  The strategy here is the same as the Balanced farmer, but with different details. Our need is to being addicted to watch how the market goes, look for the most traded coin pairs, discovering new appealing and hyped project moved by the FOMO. It means RESEARCH, STUDY and COMMITMENT. We cannot miss out anything and being prepared to move the assets from pools to pools, for limit losses (there can be them often if we do mistakes). What is the main goal ? The goal is find the BEST LIQUIDITY POOL (it's purely personal, your best can be different from mine) based upon four main factors: HIGHEST APY, HIGHEST 24H VOLUME, HIGHEST FEE RATE, and HIGHEST TVL. Let's cover them one by one. The HIGHEST APY, we already know it. HIGHEST 24H VOLUME, the total amount of that specific trade pair that has been traded in the last 24 hours (the more the pair is traded, the more we can earn). HIGHEST FEE RATE, the earnings percentage from each trade that occurs within the pool. HIGHEST TVL, the total value locked in that pool: more value can mean less revenue (however, APY dictates the rules), but looking at the TVL, for me, is a trust factor. Why ? If a pool is A LOT RISKY, few people will put money in it. If you want to maximize the power of your cryptocurrencies and make a ton money with even a small investment, THIS IS THE BEST CHOICE. Risky, but attractive and saisfying.

BE CURIOUS, ADVENTURERS. The treasure is in our path, it's all about CONSISTENCY. AND REMEMBER TO ALWAYS DYOR.

Stay tuned my fellow readers, more chapters of the saga are coming. Follow me for embrace wealth.

It's your GreenPanda here, have a nice day.