Yield farming is a popular topic in the DeFi space for some time now. We know you may have many questions regarding yield farming – What is it? Why is it generating so much buzz?
Let’s start with a simple statistic. In 2020, the DeFi space is so far growing at a rate of 150% in terms of total value locked (TVL) in dollars. In comparison, the crypto market capitalization has so far grown at a rate of only 37%.
Many experts give credit to yield farming for the astounding growth of the DeFi space this year. The progress is because of the concept of liquidity farming. It involves both investors and speculators as they supply liquidity to platforms providing lending and borrowing services. In return, the lending and borrowing platforms pay high-interest rates to them. They also receive a part of the platforms’ tokens as incentives.
The current stars of the DeFi space are the liquidity providers. They are referred to as yield farmers. Compound (COMP), Curve Finance (CRV), and Balancer (BAL) are among the leading names.
Compound: The First To Initialize the Liquidity Farming Craze
It all began with the live distribution of Compound’s COMP token on June 14th. COMP is the governance token of Compound. The live distribution of COMP token was very successful. It helped the platform reach $600 million in total value