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Yield Farms

By nauxxlov | onajourney | 10 Sep 2020

 From what I see so far, there are two types of farms.

Type 1: Single token

These farms are relatively safer as you are only putting in one token to farm for the new token. Since you're getting the farmed token for free, the returns are usually lower. You can unstake anytime and get back the amount of tokens you put in + farmed tokens.

Type 2: Multiple tokens

Multiple tokens provide liquidity to the pool and holding LP tokens means you're at risk of incurring impermanent loss. Returns on this will be higher than the single token farms. 

Multiple tokens can be represented as a single token. To get this token, you'll have to put in equal values of each of the tokens. 

The amount of farmed tokens you get is proportional to the amount you stake and the duration staked. There may be other factors but this is my experience so far. Also as more people enter the pool, the rewards get lower as it's spread out  across more people. This is why early whales will always win.

Newly farmed tokens can be used to stake yet another new token so this is a chain that can go on and on, given the speed of how new projects are popping up. It's a game of chasing the highest yields. Until it all explodes.

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