Ethereum’s decentralized finance sector, or DeFi, has seen explosive growth over the past few months. And one of the major dynamics driving this recent growth has been the rise of what’s called yield farming.
So what is it? Yield farming centers around governance tokens, like Compound’s COMP or Curve’s CRV, that are used by DeFi projects to manage their respective protocols. In yield farming campaigns, governance tokens are rewarded to users who supply and use these protocols.
Synthetic assets project Synthetix was one of the first projects to experiment with this kind of campaign back in March 2020, when the team rewarded sUSD liquidity providers on Curve and an earlier rendition of yEarn with Synthetix’s SNX tokens.
However, Compound’s launch of its COMP rewards in the early summertime really catalyzed the phenomenon and paved the way for other projects to follow suit. Since then, yield farming has taken the DeFi arena by storm, with governance tokens like YFI, CRV, BAL, MTA, and more launching out of the gates with these campaigns live, and to much ado.
That said, yield farming is still very young and chances are we’re going to see projects experimenting with this cryptonative bootstrapping method for years to come. It’s hardly too late to learn about and participate in yield farming opportunities, but you’ll want to go into your neo-agricultural endeavors with the best tools possible. To that end, here’s a list of great resources I recommend to any yield farming newcomers.
Created by the developer weeb as a labor of love project, yieldfarming.info is a bare-bones site that you can plug your Ethereum address into in order to easily fetch stats about your ongoing yield farming activities.
The site tracks some of the arena’s biggest rewards opportunities, like the Curve sUSD pool that awards liquidity providers with both SNX and CRV. The resource also has a FUN ZONE, where data can be fetched on riskier and more explicitly experimental yield farming projects, e.g. Yam Finance’s now-defunct YAMv1 and Tendies (TEND).
DeFi Dad, the host of the Ethereal podcast and creator of YouTube DeFi tutorials videos, is a great person to follow if you’re interested in yield farming.
Why? He’s got a knack for explaining DeFi and yield farming processes in simple, step-by-step fashion, and he’s also always up front about the risks involved. He’s a straight shooter that’s genuinely interested in helping newcomers learn the ropes of Ethereum’s hottest projects, so he can definitely bring you up to speed in great form.
— ⟠ DeFi Dad ⟠ defidad.eth (@DeFi_Dad) August 19, 2020
Zapper, the result of a merger between the DeFiZap and DeFiSnap teams back in May 2020, has quickly become the quintessential DeFi dashboard for Ethereum’s first wave of yield farmers.
What’s great about Zapper is that it’s not just an excellent portfolio tracker. The dashboard helps you “zap” into liquidity pools and yield farming opportunities with essentially a one-click experience, as it efficiently takes care of all necessary transactions under the hood.
If I didn't have @zapper_fi to aid me while I've been yield farming over the last few weeks I probably would have gone insane
— Anthony Sassano | sassal.eth 👨🌾 🏴 (@sassal0x) August 21, 2020
Notably, the site also has a section specifically dedicated to tracking yield farming gains in real-time.
Interested in Ethereum and DeFi projects but still using CoinMarketCap as your go-to crypto markets website? Then welcome to the light my friend, which is CoinGecko.
CoinGecko does everything CMC does, but its team is far more nimbler and has a deeper knowledge of the cryptoeconomy. If you’re a yield farmer, CoinGecko is a great site for studying key market data around the projects your interested in farming and for finding good trades via its trading pairs lists.
Moreover, with yield farming campaigns now sprouting up around social money projects like $ALEX, CoinGecko is one of the first and best sites to track social money stats. It’s certainly a resource to have on your radar.
.@coingecko has fully replaced CMC for me. it took a long time (old habits die hard) but finally something managed to do it
— Hasu (@hasufl) August 21, 2020
Decentralized exchanges, or DEXes, are king in 2020, and Uniswap is king of the DEXes. Learn about it now and get comfortable with the protocol, because it’s here to stay and it’s going to be a tour de force going forward.
The reason I mention Uniswap with regard to yield farming is that sometimes you’ll need to trade into assets to stake those assets for farming. To that end, Uniswap is ultimately your best bet. It has the best liquidity and overall trading experience in the entire DEX arena.
ETH Gas Station
Within the past month, Ethereum saw its gas prices — the cost to process an Ethereum transaction — go bonkers. At one point, these prices hit 400 gwei, which in layman’s terms simply means transactions got atypically expensive.
The good news is that means demand to use Ethereum is high, and moreover that scaling solutions are right around the corner, but in the meantime, high gas prices are going to be painful for most yield farmers. You’ll benefit by keeping track of current gas time stats, and for that ETH Gas Station is an excellent tool.
The yEarn project has taken DeFi by storm this year. Why? Because the protocol does a superb job of giving users the ability to automatically generate yield around Ethereum’s hottest projects.
However, even though yEarn makes DeFi yield farming easy, it isn’t necessarily the easiest project to wrap your head around at first. For that, learnyearn.finance is a grassroots resource that does a good job of breaking down the various critical dynamics of the yEarn project.
DeFi Pulse Farmer
Sometimes it takes someone who has a way with words to really help you grasp complicated things for the first time. Cooper Turley, a writer for the DeFi Pulse Farmer newsletter among other ventures, is exactly that person when it comes to yield farming.
The DeFi Pulse site is an excellent source in general for Ethereum users, but Turley goes deep into yield farming with the Farmer newsletter, and if you’re looking to get into the scene, subscribing is a great start.
Zerion is like Zapper, it’s another fantastic dashboard for DeFi users. Some might prefer Zapper, and some might prefer Zerion, but the latter is a great dashboard too and you won’t be sure which you like until you try both.
That said, one area where Zerion is more nimbler for now is social money tokens, e.g. ALEX and beyond, in that it’s already added support for the major ones. And that’s key for some users at a time when yield farming activities are starting to crop up around these person tokens, too.
Since DeFi activities are so new, dealing with taxes related to DeFi can be a headache. Yield farming is hardly an exception here.
Yet some tax resources are better than others when it comes to catering to the needs of DeFi users and in extension yield farmers. TokenTax is one such tool. The builders of the solution use DeFi apps themselves, so they know firsthand the wants and needs of DeFi users that want to track all their dealings efficiently.
The recent rise of DeFi and yield farming has pulled the cryptoeconomy toward a bull market. But beyond the hype, risks most certainly abound.
To cut through these risks and yield farm as safely as possible, you’ll need to use the best resources around. Be smart, and be cautious, and use the best information available to make informed decisions for your trades.