As the market dip keeps dragging in, investors are now looking for ways to earn passive income in cryptocurrencies. Decentralized finance (DeFi) has grown immensely and gave birth to most passive investments we know today. One of the most sought passive investments is yield farming. In this article, we will give you a list of the best yield farming platforms in crypto. Before investing in any of these platforms, always do your due diligence. Keep in mind that these protocols have their pros and cons. Choose one with manageable risk for you. Let’s begin our roundup of the leading yield farming in the market today.
The protocol is the leading automated market maker (AMM) and farm yield launched in Binance Smart Chain with a total value locked of $3.98 billion in data by DeFi Llama. Founded in September 2020, the protocol is the first DeFi project launched in the BSC network. Ranked at #8, PancakeSwap is now one of the leading platforms in the DeFi space. The platform offers one of the cheapest rates and fastest transactions of its kind. On top of that, it also gives one of the best rates for crypto-yield farmers.
Users can join the platform’s yield farming in two ways. First, users can stake token pairs in the platform. Another option is to become liquidity providers by delegating their tokens into the protocol’s liquidity pool. In return, users earn LP rewards APR as liquidity providers and farm base rewards APR for staking their tokens in the farm.
In February, PancakeSwap launched HIGH-BUSD Farm and $HIGH Syrup Pool which offers a high APR. Users who staked their tokens on the $HIGH syrup pool during the launch received up to 895.52% rewards. But rates had so far declined as a result of increased liquidity in the platform. As of writing, APR for HIGH-BUSD Farm is now at 28.29%.
The decentralized exchange (DEX) built on the Ethereum network is dubbed as “king of DEXs”. With a TVL of $5.68 billion, the exchange is ranked #5 by DeFi Llama. Currently, the platform has two live versions: V2 and V3. Its frictionless feature allows users for trustless coin swaps. The platform now supports the swapping of more than a thousand digital assets. To participate in the liquidity pool, users need to stake a 50/50 ratio of token pairs to become liquidity providers. Participants then receive a percentage of the fees from the transactions on the platform. As liquidity providers, users can earn from 20% to 50% APR.
One of the drawbacks of the platform is the relatively high fees since it is built on the Ethereum network. But despite this, the decentralized exchange remains the most preferred of its kind. It’s one reason why becoming a liquidity provider in the platform could guarantee good returns.
Ranked #3 among DeFi platforms in data by DeFi Llama, Aave has a TVL of $8.46 billion. It is an open-source liquidity protocol built on the Ethereum blockchain that allows users to borrow and lend cryptocurrencies. The platform currently supports more than 30 digital assets which include ETH (Ethereum), BAT (Basic Attention Token), and MANA (Decentraland). The platform offers one of the lowest interest rates making it attractive for crypto borrowers in the market. Borrowers are granted a loan equivalent to their posted collateral. Users can earn up to 7.45% APY for staking Aave tokens in the protocol’s liquidity pool. To join Aave’s yield farming, users need to buy ETH (ethereum) and swap it for AAVE (Aave) tokens.
The platform also offers flash loans which have contributed to its popularity among DeFi users. Although borrowers are not required to post collateral, they need to pay a 0.09% fee of the amount loaned. They also need to repay the borrowed amount within the same blockchain transaction.
A decentralized exchange built on the Ethereum network that focuses on efficient trading of stablecoins. With its nature, investors in the platform are protected from the volatility of digital assets. It is an automated market maker (AMM) that maintains low fees and slippage through the use of liquidity pools. With a TVL of $8.47 billion, it is the second-largest DeFi platform in data by DeFi Llama.
The platform utilizes a more efficient algorithm, with the lowest levels of fees, slippage, and impermanent loss compared to other DEX on the Ethereum network. By staking their assets in the platform’s liquidity pools, users earn CRV (Curve DAO) tokens as rewards on top of the fees and interest. Users in the platform can earn from 1.92% to as much as 32% APR. But it is important to take note that owning a significant amount of the DAO’s governance tokens that are vote-locked empowers users to propose an update to the DeFi protocol.
- Venus Protocol
With a TVL of $782.87 million, the protocol belongs to the top DeFi platforms in the market. It is an algorithmic-based, money market system designed to enable decentralized lending and borrowing. In September 2020, the protocol was launched in the Binance Smart Chain network.
Users can execute different yield strategies on the platform. By simply supplying assets, users can earn from 0.13% (SXP) to 38.43% (DOT) and receive XVS (Venus Protocol), the protocol’s native token. They can also supply assets then borrow other assets and farm them to other platforms like PancakeSwap. And lastly, users can leverage their supply and borrow multiple assets on the protocol.
Yield farming offers attractive rates and is one of the best passive crypto investments. Unfortunately, it is not suited for beginners considering the financial risks that come with it. Impermanent loss is considered the biggest risk so far. It happens when the prices of the cryptocurrencies you deposited fluctuate. Another risk is the failure of smart contracts. Flash loan exploits are now one of the major concerns among DeFi lending protocols. If you are a beginner and still exploring cryptocurrencies, it is best to educate yourself before investing in yield farming.