Yield farming is one of many ways to earn interest on idle cryptocurrency holdings. The main concept is that by lending your digital assets to a liquidity pool, you will be paid an attractive APY on your funds.

In this guide, we review the best yield farming crypto platforms for 2023 in terms of interest rates, security, lock-up terms, supported tokens, and more.

The Best Yield Farming Crypto Platforms for 2023 List

In the yield farming crypto list below, you will find an overview of the best platforms in the market right now to make money with cryptocurrency.

  1. Wall Street Memes – This meme-based cryptocurrency token can be staked to generate a yearly yield of 68%. $WSM, the native token, is currently priced at $0.0337 on its final presale round and has raised over $25 million. 
  2. Bitcoin BSC – A project inspired by Bitcoin, Bitcoin BSC is a BNB smart chain-based stake-and-earn token. Currently, token holders can earn a whopping annual percentage yield (APY) of 2,196% by staking $BTCBSC. 
  3. XRP20 – Upcoming yield farming platform still in the presale stage with Ripple ethos, retail investor focus, and low price entry. The hard cap of $3.68 million has been reached.
  4. Lucky BlockPromising Yield Farming Crypto Platform Alternative for 2023
  5. OKX – Top Yield Farming Crypto Platform with Low Fees
  6. Battle Infinity – Earn 12% APY with IBAT Battle Stake
  7. DeFi Swap – Earn Up to 75% APY on DeFi Coin
  8. YouHodler – Worldwide Exchange with Yield Farming
  9. eToro – Regulated Platform Offering Crypto Interest Tools
  10. Crypto.com – Great Platform for Earning a High APY on Stablecoins    
  11. Coinbase – Top-Rated Yield-Generating Platform for Beginners

Reviews of the providers from the above high yield farming crypto list can be found below.

Top Yield Farming Crypto Platforms Reviewed

We researched the best yield farming crypto platforms for 2023 and found that the top providers in the market offer a good balance between safety, attractive yields, and reasonable lock-up terms.

We also considered factors surrounding user-friendliness, customer service, and supported tokens.

1. Wall Street Memes – Meme Cryptocurrency Offering a 68% Yield on Staking the Native Token

One of the best yield farming cryptocurrency platforms in 2023 is Wall Street Memes, a new meme cryptocurrency project. This new cryptocurrency has been making waves in the crypto space, as it has raised over $25 million through the ongoing presale. 

Wall Street Memes is a meme coin project aiming to give control to retail investors

Despite being a meme project, Wall Street Memes offers real utility through its high-yield mechanism. The Wall Street Memes yield mechanism is all set to surpass 300 million staked tokens. For context, Wall Street Memes has a total supply of just 2 billion, out of which 1 billion are available during the presale. 

A reason for the popularity of this platform is due to the high yield being offered. At press time, token holders can lock up $WSM and generate an annual yield of 68%. The number will decrease as the tokens increase on the yield mechanism. Another 30% of the token supply will also be provided to users as community rewards. 

Currently, Wall Street Memes is priced at $0.0337 on its final presale round. The presale hard cap is set at more than $30.5 million. Once the presale ends, Wall Street Memes will list the token on tier one exchanges. Another 20% of the token supply will be allocated to maintain CEX and DEX liquidity. 

WSM staking APY

 The initial exchange offering is expected to take place by the end of September 2023. Investors can buy $WSM on the presale and start yielding a generous APY with Wall Street Memes. 

What We Like About Wall Street Memes:

  • Soaring presale
  • High APY of 68%
  • Nearly 300 million tokens locked 
  • Low presale prices
  • Low supply of 2 billion tokens

2. Bitcoin BSC – Priced at $0.99 per Token, BTCBSC Offers a 2,196% Annual Yield 

The next cryptocurrency on our list is Bitcoin BSC ($BTCBSC), a new token that has recently been launched on presale. Bitcoin BSC is inspired by Bitcoin and offers the same token supply of 21 million. Like Bitcoin, the Bitcoin BSC project will also follow the 120 year block schedule. 

Bitcoin BSC $214K raised

The only difference is that Bitcoin BSC will use a stake-and-earn mechanism. While Bitcoin generates new blocks via mining, Bitcoin BSC has opted for a more eco-friendly and sustainable approach. This project is built on the BNB smart chain, which offers quick transaction times and low costs compared to Ethereum. 

The $BTCBSC token is currently priced at just $0.99 on presale. From the 21 million token supply, 6.125 million have been allocated for the presale. The first phase of the presale has allocated 4 million tokens. Another 2.125 million tokens will be added after the first phase completes. 

Bitcoin BSC 2,196% staking APY

After making a minimum presale investment of $10, token holders can stake $BTCBSC. Currently, the ecosystem is offering a staggering annual yield of 2,196%. The yield will reduce as more tokens are staked on the ecosystem. Currently, over 116,000 tokens have been staked on Bitcoin BSC. 

The successful presale has raised more than $210K in only three days. For more information on this cryptocurrency,  Bitcoin BSC whitepaper and join the Telegram channel

What We Like About Bitcoin BSC:

  • Offering a 2,196% yield
  • Priced at only $0.99 on presale
  • Eco-friendly blockchain
  • Over $200K raised in 3 days of presale

3. XRP20 – Passive Income Token With Retail Investor Focus and Deflationary Tokenomics, Presale Sold Out

XRP20 ($XRP20) is a passive income token that generates yields for investors. The cryptocurrency has sold out its presale, raising $3.68 million.

Though not strictly affiliated with Ripple (XRP), XRP20 wants to give investors a second chance to invest in a token that was historically restricted to a select number of people. The original Ripple founders also kept a certain percentage of the token supply to themselves.

XRP20 presale sold out

In contradistinction, XRP20 seeks to democratize access so that retail investors have a chance at the “second coming of Ripple”, though it’s definitely worth bearing in mind that the project bears no official resemblance to Ripple in any way. 

XRP20 is a stake to earn token that generates yields for holders. The yields is currently 46%, annually. But this project also has the potential for price appreciation, which is the main reason why it is number one on our list. It combines a low entry price ($0.000092), a community and retail oriented focus (the “XRP20 Army”), topical news (the legal victory of Ripple over the SEC), token burning (10% of the total supply and 0.1% of each transaction) and staking yields. 

These are powerful incentives for increased interest, potentially leading to token price appreciation. It’s also why this project has reached 80% of its targeted hard cap in such a short period of time. As an added benefit, this ecosystem has undergone a third party smart contract audit where no high or medium severity issues have been found. 

More information can be found in the XRP20 whitepaper and Telegram group.

What We Like About XRP20:

  • Retail investor focus
  • No tokens withheld by a central agency
  • Ultra low price entry
  • Rapid sellout indicates high public interest
  • Strong token burning protocols

4. Lucky Block – Promising Yield Farming Crypto Platform Alternative for 2023

LBLOCK logoThose looking for the best yield farming crypto platform in 2023 may wish to consider Lucky Block. Although not technically a yield farming platform, Lucky Block offers a range of services that can mirror – and potentially even beat – the returns provided by these platforms.

The first thing to note is that Lucky Block is one of the best Bitcoin casinos in the space, allowing users to bet on a range of table games, along with sports and eSports betting. One of the aspects that makes Lucky Block a viable alternative to yield staking platforms is the recently-announced ‘Races’ feature, which offers rewards based on the user’s turnover.

Lucky Block casino

Prizes range from €50 to €1,000, with no minimum deposit threshold to enter. This means all players need to do is play their favourite games as actively as possible to be in with a chance to win these prizes.

In addition, Lucky Block is also offering a 15% cashback promotion for users’ first seven days on the platform. Cashback is paid on net losses, allowing players to make a sort of ‘return’ on what they lose.

Aside from these promotions, those looking for a yield farming platform may find Lucky Block an appealing alternative since the casino offers over 2,700 games, with funding support for ten different cryptos – including BTC, ETH, and DOGE. Users can place bets on world-class games like Aviator and Crash, along with an array of sports betting markets, for the chance to make a return.

Lucky Block Bitcoin casino

As one of the best crypto betting sites, Lucky Block has received more attention in the wake of FTX’s collapse, which has sent ripples throughout the yield farming space. Previously ‘safe’ projects like Hodlnaut have opted to suspend customer withdrawals – decreasing confidence that these projects can provide a yield on customers’ funds.

Those looking to get started with Lucky Block today can sign up in minutes without lengthy KYC checks. Although the platform is restricted in certain countries, such as the US and the UK, users can still gain access to the platform by using a VPN.

What We Like About Lucky Block:

  • A viable alternative to yield farming crypto platforms
  • The ‘Race’ feature offers rewards of up to €1,000
  • 15% cashback on net losses for the first seven days
  • Users can play over 2,700 games using crypto
  • Isn’t at risk of insolvency like other staking platforms

5. OKX – Top Yield Farming Crypto Platform with Low Fees

OKX LogoFor investors looking to earn passive income from their cryptocurrency holdings, OKX exchange’s multiple income-earning opportunities make it another viable option. Available in 100 + countries, OKX exchange is accessed by over 20 million global users.

With OKX, investors can buy, trade, swap, stake and earn interest on their cryptocurrencies. Investors can access ‘OKX Earn’ – a one-stop-shop for multiple centralized earning options such as dual investment, P2P lending and staking. Built on the OKExChain, the Earn programme offers several DeFi (decentralized finance) products as well – including lending DApps (decentralized applications) and access to decentralized exchanges.

With the OKx Pool, investors can maximize their yields by accessing multiple mining services. Proof-of-Work (PoW) mining is supported on 9 major cryptocurrencies, such as Bitcoin. The top mining features on the OKx Pool include daily settlements, no minimum payouts and stable income flow.

Moreover, Tamadoge (TAMA), the popular new cryptocurrency, is providing its initial exchange offering with OKX. After raising $19 million to complete one of the best crypto presales, Tamadoge has been listed on the OKX exchange. The token is available on this platform’s centralized and decentralized exchange – making it accessible to investors, regardless of any geographical limitations.

After completing a quick KYC (Know Your Customer) process within 10 minutes, investors can begin trading cryptocurrencies at the low cost of 0.10% per transaction.

What We Like About OKX:

  • Available in 100+ countries
  • Multiple Yield Farming Opportunities with ‘OKX Earn’
  • Offers Access DeFi Products
  • Listed Popular Tokens such as Tamadoge (TAMA)
  • 0.10% Trading Fee on Cryptos

Cryptoassets are a highly volatile unregulated investment product. 

6. Battle Infinity – Earn 12% APY with IBAT Battle Stake

Battle Infinity logoBattle Infinity (IBAT) is a play-to-earn (P2E) ecosystem incentivizing players to participate in gaming activities in return for various rewards. The platform settles transactions and offers various P2E elements by leveraging IBAT – the native cryptocurrency.

After accessing IBAT tokens from Battle Infinity’s decentralized exchange, investors can earn passive income through the staking platform – IBAT Battle Stake. On 24th September 2022, Battle Infinity’s official Twitter handle announced that the IBAT Battle Stake is now live.

Battle Infinity stake

Within two days of the announcement, the platform has collected over $3 million in total locked value. With a maximum supply of 10 billion tokens, nearly 10% of IBAT has been locked on the staking protocol. The instant success of the staking platform stems from the high APYs (Annual Percentage Yields) that investors can benefit from.

For example, the flexible staking protocol offers investors a staggering 12% APY on IBAT. The returns are even higher for investors looking to lock up their IBAT. For a 90-day lock-up period, investors can earn 14% APY. The APY increases to 17% for 90 days, 20% for 180 days and 25% for a 360-day lock-up period.

IBAT can also be staked to access other P2E elements such as the IBAT Battle Games – a multiplayer game store offering several P2E NFT games.

Apart from earning interest on IBAT staking, investors can pair up any other token with IBAT and receive interest on the pairing as well. A multi-use platform, players can access P2E features such as the Battle Arena – a virtual ecosystem where all items and characters will be minted as NFTs using  ERC 721 smart contracts.

IBAT is currently trading at $0.0035 per token.

What We Like About Battle Infinity:

  • 12% APY on Flexible Staking
  • Up to 25% Returns on Locked-Up Assets
  • 10% of all Tokens Locked-Up
  • P2E NFT Games

7. DeFi Swap – Earn Up to 75% APY on DeFi Coin

DeFi Swap LogoDeFi Swap is a crypto exchange and yield farming platform that offers crypto investors returns of up to 75% APY. The key to DeFi Swap’s high rates is its native DeFi Coin token (DEFC), which is the only crypto available for staking on the platform. You must lock in your coins for at least 30 days and up to 1 year. A 30 day lock-in period offers a 30% APY rate, while a 1 year lock-in offers a 75% APY rate.

DeFi Swap is relatively new, but it’s quickly gained attention as one of the top new yield platforms of 2022. First, this is a fully decentralized exchange and DeFi service. You can swap into DeFi Coin using virtually any major cryptocurrency, including most stablecoins. Notably, DeFi Swap has made no secret of the fact that it wants to become the place for decentralized finance, so early investors could see higher rates or more yield farming options in the future.DeFi Swap Exchange

For now, DeFi swap is available online or as a decentralized app. You must connect your wallet to see available staking options and interest rates.

What We Like About eToro:

  • Earn interest rates up to 75% APY
  • Staking periods of 30, 90, 180, or 365 days
  • Convert to DeFi Coin from most cryptocurrencies
  • Fully decentralized platform

Cryptoassets are a highly volatile unregulated investment product. 

8. YouHodler – Worldwide Exchange with Yield Farming youhodler logo

Swiss-based YouHodler has been gaining traction recently as a result of its attractive lending options, slick interface, and transparent nature. Since it was founded in 2017, YouHodler accumulated more than 150,000 users within the 200+ countries it operates in.

Security on YouHodler is excellent. Funds are secured in a mixture of hot & cold wallets and Ledger Vault technology has been implemented to provide users with more custodial options. Additionally, users with over $10k in their accounts can use ‘3-factor authentication’ to suspend withdrawals.

YouHodler is famous for its excellent yield farming options. The top 50 cryptocurrencies are accepted and interest can be as high as 15%. Rewards for holding stablecoins can be up to 12.3% (excluding compounding) and Bitcoin can yield up to 6.8%. Returns do vary from asset to asset so it’s worth double checking rates before registering.

For investors looking for a yield farming platform, YouHodler is a great choice. It’s available almost everywhere except US territories, Germany, and a few Middle-eastern countries. With a wide array of accepted assets, transparent fee structure, and easy-to-understand terms, YouHodler is a sure contender for the best yield farming platform.

Cryptoassets are a highly volatile unregulated investment product.

9. eToro – Regulated Platform Offering Crypto Interest Tools

etoro review

If your main priority when searching for the best yield farming crypto sites is safety, look no further than eToro. Although this platform – which is regulated by the SEC, ASIC, FCA, and CySEC, doesn’t offer conventional yield farming services per se, eToro does allow you to earn passive interest. This is offered via an automated staking tool that generates income for as long as the tokens are held in your eToro account.

As of writing, eToro offers crypto staking services on Cardano, Ethereum, and Tron. There is no requirement to lock your tokens up for a minimum number of days, as all eToro interest-bearing tools are offered on a flexible basis. This will suit those that might require access to their crypto assets at short notice. In addition to a strong regulatory status and institutional-grade security tools, we also like eToro for its low-cost brokerage and exchange services.

etoro review

For instance, eToro allows you to buy cryptocurrency on a spread-only basis, from just $10. Moreover, there are no fees to deposit funds in US dollars, nor will you be charged anything to store your tokens in the eToro crypto wallet.

eToro is also a popular option for mobile users, as the provider’s crypto wallet app allows you to exchange tokens across 500+ pairs. And finally, eToro offers a copy trading service that allows you to trade cryptocurrencies in a 100% passive manner.

What We Like About eToro:

  • Regulated by the SEC, ASIC, FCA, and CySEC
  • Automatically earn interest on supported tokens
  • Withdraw your tokens at any time
  • Also supports spread-only crypto purchases and copy trading tools

Cryptoassets are a highly volatile unregulated investment product. 

10. Crypto.com – Great Platform for Earning a High APY on Stablecoins

crypto.com logo

If you’re looking to earn the highest rate of interest possible on cryptocurrencies – without worrying about volatile pricing spikes, perhaps consider Crypto.com. This top-rated provider allows you to earn an APY of up to 14% when depositing stablecoins such as Tether and USDC into your account. There are, however, certain variables that will determine the exact APY that you are paid.

For instance, in order to earn the full 14% APR on Tether, you need to lock your tokens up for three months. You will also be required to stake no less than 40,000 CRO tokens. On the other hand, if you were to deposit Tether without staking any CRO tokens and on a flexible withdrawal basis, then the APY drops to 6%. As such, Crypto.com offers various APYs to suit different requirements. Crypto.com review

With that said, Crypto.com offers more than 250+ digital currencies that yield interest – most of which fall outside of the stablecoin arena. This includes everything from Bitcoin, Ethereum, and Litecoin to Solana, Shiba Inu, and Decentraland. Once again, the APY that you can earn will depend on the lock-up period and whether you wish to stake CRO tokens. Nevertheless, Crypto.com also offers a popular mobile app that allows you to access your account no matter where you are located.

What We Like About Crypto.com:

  • Supports more than 250+ coins
  • Attractive rates on interest
  • Increase APYs by staking CRO tokens
  • Trusted platform

Cryptoassets are a highly volatile unregulated investment product.

11. Coinbase – Top-Rated Yield-Generating Platform for Beginners

Coinbase is one of the world’s largest cryptocurrency exchanges in terms of user accounts – with the platform now supporting tens of millions of traders. You can easily buy digital currencies here with a debit or credit card, and the Coinbase trading platform itself is perfect for beginners. Once you have crypto in your Coinbase account, you have the opportunity to start earning interest.

This is offered via its automated staking tool – which comes with no lock-up period. As Coinbase has only recently entered the crypto yield space, the platform supports just six tokens as of writing. This includes Cosmos (5%), Tezos (4.63%), Ethereum (4.5%), and Algorand (4%). Stablecoins include Dai (2%) and USDC (0.15%). Although Coinbase is ideal for newbies, the APYs on offer are a lot less competitive when compared to other platforms.

coinbase staking

On the other hand, Coinbase does offer some of the best security protocols in this space, which includes cold storage, two-factor authentication, and IP address/device whitelisting. Moreover, Coinbase is not only a regulated entity in the US, but the company now trades on the NASDAQ exchange. Coinbase is also a good option if you want to create a diversified portfolio of cryptocurrencies, as the platform supports more than 50+ digital tokens. 

What We Like About Coinbase:

  • Regulated entity in the US
  • No penalities on withdrawals
  • Deposit funds in crypto or US dollars
  • Perfect for beginners

Cryptoassets are a highly volatile unregulated investment product.

What is Crypto Yield Farming? 

Crypto yield farming occurs when you stake or lend your crypto holdings to generate passive returns and earn rewards. Decentralized finance, or DeFi for short, has gained traction lately as a result of new features such as liquidity mining.

How Does Yield Farming Crypto Work?

In its most basic form, when you use a yield farming crypto site, you will be doing so for the purpose of earning interest on your digital assets.

In many ways, this is similar to depositing money into a traditional savings account that offers an annual percentage yield (APY) on your funds.

However, make no mistake about it – not only is the concept of yield farming crypto sites a lot more complex than a conventional savings account – but the risks are much higher too. To learn more, read our guide to the best crypto savings accounts.

And as such, we’ll explain the fundamentals of how crypto yield farming works in the sections below so that you have a firm understanding of how this niche sector operates.

Crypto Yield Farming Explained – The Basics

At the start of your crypto yield farming journey, you will be required to deposit funds into your chosen platform. In turn, the digital tokens will then be deposited into a liquidity pool provider, via a smart contract.

And as such, crypto yield farming does not require an intermediary for the purpose of generating interest, as the smart contract operates on a decentralized basis.

what is crypto yield farming

So, the liquidity pool that your crypto funds are deposited into allows people to borrow capital. This might be for the purpose of speculation or in many cases – as a means to access liquidity.

After all, newly launched digital tokens will often require additional levels of liquidity so that buyers and sellers of the respective project have access to smooth market conditions.

APYs 

In terms of how much you can make when you engage with a crypto yield farming platform – this will depend on a variety of factors. At the forefront of this is the respective digital token that your funds are providing liquidity for.

  • For instance, if the smart contract provides liquidity for a newly launched cryptocurrency that carries a small market capitalization, then highly attractive APYs are likely to be offered.
  • In fact, it is not unusual for such tokens to offer triple-digit yields.
  • On the other hand, if you are depositing funds into a crypto yield farming pool that provides liquidity for an established, large-cap project – then expect the APYs to be much lower.

This is a classic example of risk and reward, insofar that the higher the APY, the more pricing volatility you should expect. More on this later.

Yield Farming Pairs 

Another important thing to know about yield farming crypto sites is that each liquidity pool comes as a trading pair.

  • As a basic example, let’s say that the smart contract deposits funds into a BTC/ETH pool.
  • In doing so, you are providing liquidity for both Bitcoin and Ethereum, which, in turn, ensures that sufficient levels of capital are available on this trading pair.
  • In this example, the liquidity is likely being provided to an exchange that offers a trading market on BTC/ETH.

And with this in mind, when you engage in yield farming crypto services, you need to consider volatility levels for both of the digital tokens in the respective pair.

Reward Coins 

When you deposit funds into a traditional savings account, interest is paid in the respective currency. For instance, depositing $1,000 into a Wells Fargo savings account at an APY of 1% would generate $10 worth of interest per year.

However, in the case of yield farming crypto sites, there are a couple of clear differences to consider.

  • First and foremost, your interest payments will be distributed in digital assets as opposed to fiat money.
  • Second, there can and will be a variation in the digital asset that your interest is paid in.
  • Crucially, this will largely depend on the crypto yield farming platform that you decide to use.
  • For example, if the yield farming site specializes in the digital assets operating on top of the Binance Smart Chain, then your rewards might be paid in BNB.
  • On the other hand, the yield farming site might distribute rewards in its own native token.

As such, this is something to consider in your search for the best yield farming crypto platform for your requirements.

Lock-Up Period 

We have made reference to lock-up periods several times throughout this guide. In a nutshell, this refers to the amount of time you will be required to lock your tokens up for prior to being able to make a withdrawal.

  • For instance, Crypto.com offers up to 14% per year on stablecoins when you lock your tokens up for at least three months (CRO staking requirements also apply).
  • This means that – in a similar nature to traditional bonds, you won’t receive your initial principal investment back until the lock-up period concludes.
  • There are also flexible yield farming platforms – on which you won’t be required to lock your tokens up for a minimum number of days or weeks. And as such, you can withdraw your tokens from the platform at any given time.

The lock-up terms stipulated by your chosen yield farming crypto platform are a crucial metric to consider before signing up.

After all, if you need access to your digital assets but your tokens are locked away in a smart contract – you won’t have any way of making a withdrawal until the minimum redemption period passes.

Distribution Frequency 

Another thing to bear in mind when searching for the best yield farming crypto platform is with respect to the distribution frequency of your interest payments.

For example, some yield farming platforms distribute interest payments anytime users want. This then allows you to re-inject the funds back into an interest-paying account, which in turn, will allow you to benefit from compound growth.

On the other hand, some crypto yield farming sites will distribute interest at the end of the lock-up term. This means that you won’t have access to any funds – including rewards and your initial principal investment until the lock-up period has concluded.

Is Yield Farming Crypto Profitable?

It goes without saying that the primary objective for engaging with a crypto yield farming site is to make money. However, that begs the question – just how profitable is crypto yield farming?

There is no hard and fast answer to this question, as too many variables are at play. For example, the first thing to consider is the specific APY that you will be paid for lending your tokens out to a liquidity pool.

In its most basic form, if you lend $2,000 worth of crypto at an APY of 10%, then in 12 months’ time, your digital asset portfolio will now be worth $200 more.

best crypto yield farming platform

However, it’s not this simple in the world of crypto yield farming, as your rewards are paid in digital tokens as opposed to fiat money.

And as such, you need to consider that the value of the digital tokens being invested and received as interest will fluctuate as per market forces.

Let’s look at a simplistic example to help clear the mist:

  • We’ll say that you decide to invest in an Ethereum pool that offers an APY of 6% per year
  • You invest a total of 1 ETH, which, at the time of the deposit, is worth $3,000
  • 12 months later, your 1 ETH investment has generated 0.06 ETH in interest payments – taking your total balance to 1.06 ETH
  • Based on a price of $3,000 at the time of the investment 12 months prior, your balance of 1.06 ETH would be worth $3,180
  • However, with Ethereum now trading at $4,000 per token, your balance of 1.06 ETH is now worth $4,240

As per the above example, a core objective of crypto yield farming is not only to earn an attractive APY, but to see the value of the respective token increase in the open marketplace.

If this does happen, you will earn money on two fronts – interest and capital gains.

However, as we explain in more detail shortly, should the value of the token go down while engaging in crypto yield farming, your investment could be worth less at the time of withdrawal.

What Cryptos Can You Yield Farm?

As we briefly mentioned earlier, there is virtually no limit to the number of digital assets that can be used to earn interest via crypto yield farming.

This is because the main concept of yield farming is to provide a specific trading pair with sufficient levels of liquidity.

And, when you consider that all crypto trading pairs require liquidity for the purpose of providing optimal market conditions, this means that you have plenty of options when it comes to choosing a token.

With that being said, the specific liquidity pool that your tokens are deposited into will have a major impact on how much interest you can make.

For example:

  • If you were to provide liquidity for a major pair like ETH/BTC or BNB/ETH, then the APYs on offer are going to be somewhat modest.
  • However, if adding funds to a less liquid pool like AAVE/ETH, more competitive rates of interest will be available.
  • At the other end of the spectrum, if the liquidity pool concerns a newly launched digital token with a tiny market capitalization, then you might be able to earn a triple-digit APY.

Once again, the cryptocurrency that you decide to farm should be dependent on your risk tolerance. A good way to mitigate the long-term risks of crypto yield farming is to spread your investments out across a variety of pairs.

Crypto Yield Farming Taxes?

You likely know that many countries will tax cryptocurrency profits in the form of capital gains. In other words, if you buy $1,000 worth of Ethereum and cash out at $1,500 – then $500 of this figure could be liable for tax.

However, you might also be required to pay tax on any gains you make from interest-earning tools such as crypto yield farming. Depending on your country of residence, this could be taxed in the same manner as earnings made via interest accounts or dividend payments.

With that said, crypto-related taxes – especially with regards to yield farming, is a highly complex area. And as such, it’s best to speak with a qualified advisor that specializes in digital currency taxes.

Crypto Yield Farming vs Staking

There is often a misconception that crypto yield farming and staking refer to the same thing. However, while both tools allow you to generate interest on your idle cryptocurrency tokens, there are some differences.

At the forefront of this is where your tokens are deposited.

  • In the case of yield farming, your crypto is deposited into a smart contract. In turn, the smart contract will distribute your funds into a liquidity pool.
  • When engaging in crypto staking, your digital tokens are usually deposited directly into the respective blockchain network.

There are benefits and drawbacks related to both crypto yield farming and staking, so it’s worth having a think about which tool is best for your investment goals and risk tolerance.

crypto yield farming APYs

For example, crypto staking is potentially safer than yield farming, as the tokens are locked on the blockchain network as opposed to a third-party smart contract.

But, this means that the yield on offer when staking crypto is typically much lower when compared to yield farming. Moreover, when you stake crypto, you can only do so on a blockchain network that utilizes the proof-of-stake consensus mechanism.

Yield farming, however, can generally be accessed on any cryptocurrency.

Is Crypto Yield Farming Safe?

Before getting started on your crypto yield farming journey, it is crucial to consider the risks.

After all, when you consider that many liquidity pools offer double and even triple-digit APYs, the risk of loss is going to be much higher when compared to conventional savings accounts.

The main risks that we identified when reviewing the best crypto yield farming platforms are as follows:

Token Price Volatility

The first risk that you need to consider when engaging with a crypto yield farming strategy is with respect to the market value of the token.

For instance:

  • Let’s say that you invest $1,000 into a liquidity pool of a newly launched token – which yields 50% per year
  • At the end of the first year, you will have 50% more tokens that you originally started with
  • In theory, this means that your $1,000 is now worth $1,500
  • However, if the value of the respective token has since dropped by over 80% – your original investment is now worth considerably less

This is because your $1,500 worth of tokens now carries a market value of just $300.

This is why it might be best to only invest funds into liquidity pools that contain established, large-cap tokens.

Although you still face the prospect of the token going down in value while being farmed, the risk of this happening will be lower when compared to less liquid projects.

Platform Risk

Many of the best crypto yield farming tools are offered by third-party platforms. Irrespective of whether the platform operates on a centralized or decentralized basis, you need to remember that your funds are never 100% sure.

  • For example, if investing funds into a centralized yield farming site, you are trusting your funds with the respective provider.
  • This means that you need to trust that the provider will keep your funds safe and away from the threat of remote hackers.
  • You also need to trust that the centralized platform will pay you the interest it owes you – and that it fulfills your withdrawal request when the time comes to cash out.

In the case of a decentralized platform, your agreement will be honored by a smart contract. However, while smart contracts are known for their immutable and transparent characteristics, they are not 100% foolproof.

By this, we mean that there is every chance that a bad actor finds a vulnerability in the underlying code. If this does happen, your funds could be at risk.

Rug Pulls 

In the cryptocurrency space, rug pulls refer to digital token projects that are created with the sole purpose of theft.

This can happen when the developer behind the project runs away with the digital assets that are collected during the initial fundraising campaign.

And as such, by injecting funds into a high-yield farming crypto project that turns out to be a rug pull, you will likely lose the entire value of your principal investment.

Liquidity Risk

Another risk that needs to be considered before you invest funds into a crypto yield farming pool is with respect to liquidity.

By this, we mean that should the respective pool come with a minimum lock-up period, you won’t be able to access your funds until the redemption period clears.

This can be highly problematic if you need access to fast cash – but the funds are locked up in a liquidity pool.

Conclusion

This beginner’s guide on crypto yield farming has discussed every benefit and potential drawback of this niche sector.

The key takeaway is that the best yield farming crypto platforms in the market allow you to earn interest on your idle digital assets in a safe and flexible manner.

We found that the overall best platform for those seeking to yield farm crypto is Wall Street Memes. This meme cryptocurrency offers an annual yield of 68%. Furthermore, the $WSM token has raised more than $25 million on presale.

Frequently Asked Questions on Crypto Yield Farming 

What is crypto yield farming?

Is crypto yield farming worth it?

How do you earn yield on crypto?

What is the best crypto for yield farming?

Is crypto yield farming better than staking?

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