Have you ever wondered whether you could earn crypto passive income?
To make your task easier, we have listed the Best Yield-Farming Platforms that will definitively help you to generate crypto passive income.
Brief: Uniswap is a fully decentralized protocol for automated liquidity provision on Ethereum. A simple formalized equation drives unstoppable liquidity for thousands of users and hundreds of applications.
What Is Uniswap (UNI)?
Uniswap is a popular decentralized trading protocol, known for its role in facilitating automated trading of decentralized finance (DeFi) tokens.
An example of an automated market maker (AMM), Uniswap launched in November 2018, but has gained considerable popularity this year thanks to the DeFi phenomenon and associated surge in token trading.
Uniswap aims to keep token trading automated and completely open to anyone who holds tokens, while improving the efficiency of trading versus that on traditional exchanges.
Uniswap creates more efficiency by solving liquidity issues with automated solutions, avoiding the problems which plagued the first decentralized exchanges.
In September 2020, Uniswap went a step further by creating and awarding its own governance token, UNI, to past users of the protocol. This added both profitability potential and the ability for users to shape its future — an attractive aspect of decentralized entities.
What Makes Uniswap Unique?
Uniswap exists to create liquidity — and therefore trading and the value that trading provides — for the DeFi sphere.
One of the major AMMs in operation at present, the protocol functions using a formula for automated exchange — X x Y = K. Founder Hayden Adams describes himself as the inventor of the particular implementation of the formula on Uniswap.
Uniswap is not just a decentralized exchange; it attempts to solve the issues that platforms such as EtherDelta experienced with liquidity.
By automating the process of market making, the protocol inceventizes activity by limiting risk and reducing costs for all parties. The mechanism also removes identity requirements for users, and technically anyone can create a liquidity pool for any pair of tokens.
Where Can You Buy Uniswap (UNI)?
Uniswap’s UNI governance token is available for trading on major exchanges against other cryptocurrencies, stablecoins, fiat currencies and more.
These include Binance, OKEx and Coinbase Pro, along with, naturally, Uniswap’s protocol itself.
2) Sushi Swap
Brief: SushiSwap is a peer-to-peer, decentralized exchange that allows users to swap tokens, provide liquidity, and other DeFi services. The company is based in Japan and operates a decentralized finance liquidity provision platform.
What Is SushiSwap (SUSHI)?
SushiSwap (SUSHI) is an example of an automated market maker (AMM). An increasingly popular tool among cryptocurrency users, AMMs are decentralized exchanges which use smart contracts to create markets for any given pair of tokens.
SushiSwap launched in September 2020 as a fork of Uniswap, the AMM which has become synonymous with the decentralized finance (DeFi) movement and associated trading boom in DeFi tokens.
SushiSwap aims to diversify the AMM market and also add additional features not previously present on Uniswap, such as increased rewards for network participants via its in-house token, SUSHI.
What Makes SushiSwap Unique?
SushiSwap primarily exists as an AMM, through which automated trading liquidity is set up between any two cryptocurrency assets.
Its main audience is DeFi traders and associated entities looking to capitalize on the boom in project tokens and create liquidity.
AMMs do away with order books entirely while avoiding problems such as liquidity issues, which hamper traditional decentralized exchanges.
SushiSwap aims to improve on the offerings of its parent, Uniswap, by increasing the impact users can have on its operations and future.
The platform takes a 0.3% cut from transactions occurring in its liquidity pools, while its SUSHI token is used to reward users portions of those fees. SUSHI also entitles users to governance rights.
Where Can You Buy SushiSwap (SUSHI)?
SushiSwap (SUSHI) is a freely-tradable token, with the majority of volume on major exchanges occurring on Binance, Huobi Global and OKEx.
Pairs against other cryptocurrencies and stablecoins are active, as well as with fiat, including on Bankman-Fried’s FTX exchange.
What Is Balancer (BAL)?
Balancer is an automated market maker (AMM) that was developed on the Ethereum blockchain and launched in March 2020. It was able to raise a $3M seed round by Placeholder and Accomplice.
Balancer protocol functions as a self-balancing weighted portfolio, price sensor and liquidity provider. It allows users to earn profits through its recently introduced token ($BAL) by contributing to customizable liquidity pools.
What Makes Balancer Unique?
Balancer is similar to Uniswap and Curve, in that it enables anyone to create pools of tokens. The pool adjusts itself to keep the tokens equally weighted regardless of changes in their price. However, one unique feature of Balancer is that more than one token can be added and ETH isn’t required.
Although, Balancer isn’t the first DeFi protocol to make use of AMMs, however, it has brought a new face and approach to liquidity. The unique feature of the protocol is that it allows Liquidity providers to have up to eight assets per market which are weighted by percentage and rebalanced automatically.
With Balancer, users don’t have to deposit 50% of the desired asset, but are allowed to decide how much of a supported asset they wish to deposit. Another unique feature of Balancer Lab is that users can make a high return on assets that are in low demand through arbitrage opportunities and slippage-reduction.
Where Can You Buy Balancer Token (BAL)?
What Is Aave (AAVE)?
Aave is a decentralized finance protocol that allows people to lend and borrow crypto.
Lenders earn interest by depositing digital assets into specially created liquidity pools. Borrowers can then use their crypto as collateral to take out a flash loan using this liquidity.
Aave was originally known as ETHLend when it launched in November 2017, but the rebranding to Aave happened in September 2018. (This helps explain why this token’s ticker is so different from its name!)
AAVE provides holders with discounted fees on the platform, and it also serves as a governance token — giving owners a say in the future development of the protocol.
What Makes Aave Unique?
Aave has several unique selling points when compared with competitors in an increasingly crowded market.
The project allows people to borrow and lend in about 20 cryptocurrencies, meaning that users have a greater amount of choice. One of Aave’s flagship products are “flash loans,” which have been billed as the first uncollateralized loan option in the DeFi space. There’s a catch: they must be paid back within the same transaction.
Another big selling point is how those who borrow through Aave can alternate between fixed and variable interest rates. While fixed rates can provide some certainty about costs during times of volatility in the crypto markets, variable rates can come in handy if the borrower thinks that prices will fall in the near future.
Where Can You Buy Aave (AAVE)?
5) CURVE Finance
What Is Curve?
Launched in January 2020, Curve allows users to trade between stablecoins with low slippage, low fee algorithm designed specifically for stablecoins and earning fees.
Behind the scenes, the tokens held by liquidity pools are alsosupplied to the Compound protocol or iearn.finance where to generate more income for liquidity providers.
Currently, there 7 Curve pools: Compound, PAX, Y, BUSD, sUSD, ren, and sBTC which support a swaps for wide variety of stablecoins and assets.
Curve currently has no native token. Although the team plans to release a CRV token eventually. Each Curve pool has its own ERC20 token.
What Makes Curve Unique?
The platform focuses only on stablecoins, thus offering low slippage to users and practically no impermanent loss to liquidity providers.
It supports only a handful of pairs, including DAI, USDC, USDT, TUSD, BUSD, and sUSD. It supports BTC pairs as well. It also improves on Uniswap by enabling a direct token to token swap, thus saving on slippage. Uniswap, on the other hand, swaps tokens against ETH first, resulting in more slippage.
Yield farmers can add liquidity to the given pools on Curve.finance and earn rewards without the fear of impermanent loss.
What Is Compound (COMP)?
Compound is a DeFi lending protocol that allows users to earn interest on their cryptocurrencies by depositing them into one of several pools supported by the platform.
When a user deposits tokens to a Compound pool, they receive cTokens in return. These cTokens represent the individual’s stake in the pool and can be used to redeem the underlying cryptocurrency initially deposited into the pool at any time. For example, by depositing ETH into a pool, you will receive cETH in return. Over time, the exchange rate of these cTokens to the underlying asset increases, which means you can redeem them for more of the underlying asset than you initially put in — this is how the interest is distributed.
On the flip side, borrowers can take a secured loan from any Compound pool by depositing collateral. The maximum loan-to-value (LTV) ratio varies based on the collateral asset, but currently ranges from 50 to 75%. The interest rate paid varies by borrowed asset and borrowers can face automatic liquidation if their collateral falls below a specific maintenance threshold.
What Makes Compound Unique?
According to Compound, the majority of cryptocurrencies sit idle on exchange platforms, doing nothing for their holders. Compound looks to change this with its open lending platform, which allows anybody who deposits supported Ethereum tokens to easily earn interest on their balance or take out a secured loan — all in a completely trustless way.
Compound’s community governance sets it apart from other similar protocols. Holders of the platform’s native governance token — COMP — can propose changes to the protocol, debate and vote whether to implement changes suggested by others — without any involvement from the Compound team. This can include choosing which cryptocurrencies to add support for, adjusting collateralization factors, and making changes to how COMP tokens are distributed.
These COMP tokens can be bought from third-party exchanges or can be earned by interacting with the Compound protocol, such as by depositing assets or taking out a loan
Where Can You Buy Compound (COMP)?
Brief: Synthetix is a derivatives liquidity protocol providing the backbone for derivatives trading in DeFi, allowing anyone, anywhere to gain on-chain exposure to a vast range of assets.
What Is Synthetix (SNX)?
Synthetix is a decentralized finance (DeFi) protocol that provides on-chain exposure to a wide variety of crypto and non-crypto assets. The protocol is based on the Ethereum (ETH) blockchain and offers users access to highly liquid synthetic assets (synths). Synths track and provide returns on the underlying asset without requiring one to directly hold the asset.
The platform aims to broaden the cryptocurrency space by introducing non-blockchain assets, providing access to a more robust financial market.
What Makes Synthetix Unique?
Synthetix is a decentralized exchange (DEX) and a platform for synthetic assets. The protocol is designed in a way that exposes users to the underlying assets via synths, without having to hold the underlying asset.
The platform allows users to autonomously trade and exchange synths. It also has a staking pool where holders can stake their SNX tokens and are rewarded with a share of the transaction fees on the Synthetix Exchange.
The platform tracks the underlying assets using smart contract price delivery protocols called oracles. Synthetix allows users to trade synths seamlessly, without liquidity/slippage issues. It also eliminates the need for third-party facilitators.
SNX tokens are used as collateral for the synthetic assets that are minted. This means that whenever synths are issued, SNX tokens are locked up in a smart contract.
Since launch, the protocol has transitioned to the Optimistic Ethereum mainnet to help reduce the gas fees on the network and lower oracle latency.
Where Can You Buy Synthetix (SNX)?
What Is LuaSwap (LUA)?
TomoChain launched the cool LuaSwap platform. LuaSwap Implemented based on AMM exchange (Uniswap, SushiSwap). Essentially, LuaSwap is driven by the chained community through the LUA token. The main focus is on maintaining small pools of new tokens. In addition, the LUA token economy has been redesigned with a transition timeline to not only reward early adopters, but also encourage them to stay in control for a longer period of time.
They also added the ability to use TOMO to reduce commissions, which piqued my interest. It seems like an excellent platform, the possibility of reducing the commission.The project does not have many users, but over time, everyone who is interested in it will know about the protocol.
The LUA token will be given to Liquidity Providers (LPs) to incentivize them to stay with the protocol. Holding the LUA token means holding a share in the governance of the protocol. All LUA token holders can decide the subsequent chains to implement LuaSwap on, how much LUA to distribute to LPs in the new chain, which new token projects LuaSwap should support, etc.
9) Yearn Finance
What Is Yearn.Finance (YFI)?
Yearn.finance is an aggregator service for decentralized finance (DeFi) investors, using automation to allow them to maximize profits from yield farming.
Its goal is to simplify the ever-expanding DeFi space for investors who are not technically minded or who wish to interact in a less committal manner than serious traders.
Launched in February 2020, the service, formerly known as iEarn, has seen huge growth in recent months as new products debuted and developers released in-house token YFI.
What Makes Yearn.Finance Unique?
Yearn.finance set out to simplify DeFi investment and activities such as yield farming for the broader investor sector.
The platform makes use of various bespoke tools to act as an aggregator for DeFi protocols such as Curve, Compound and Aave, bringing those who stake cryptocurrency the highest possible yield.
New features continue to be rolled out, these aiming, among other things, to help preserve the long-term value of the platform.
Yearn.finance makes a profit by charging withdrawal fees, currently 0.5% at the end of September 2020, as well as 5% gas subsidization fees. Due to its governance model, these can technically be changed by consensus at any time.
The target market for yearn.finance is investors who do not have the time to study the increasingly complex DeFi phenomenon from scratch, or who wish to optimize their returns.
Where Can You Buy Yearn.Finance (YFI)?
YFI is a freely-tradable token, with pairs for cryptocurrencies, stablecoins and fiat currencies all widely available.
Major exchanges trading YFI include Binance, OKEx and Huobi Global, as well as automated market maker (AMM) Uniswap.
10) UMA Protocol
What Is UMA [UMA]?
UMA, or Universal Market Access, is a protocol for the creation of synthetic assets based on the Ethereum (ETH) blockchain. UMA was launched in December 2018.
Synthetic assets are a class of assets that represent different, underlying assets and have the same value. UMA specifically enables its users to design and create self-executing, self-enforcing financial contracts secured by economic incentives and run them on Ethereum’s blockchain.
In essence, UMA allows counterparties to digitize and automate any real-world financial derivatives, such as futures, contracts for differences (CFDs) or total return swaps. It also enables the creation of self-fulfilling derivative contracts based on digital assets, like other cryptocurrencies.
What Makes UMA Unique?
The main idea behind Universal Market Access is reflected in its name: by developing a protocol for the creation of synthetic assets and financial contracts on the blockchain, it seeks to democratize and decentralize the financial derivatives market.
The traditional financial markets have high barriers to entry in the form of regulations and custody requirements, which tend to preclude individuals from participating in them. It is often especially difficult for would-be traders and investors to take part in markets outside of their local financial system. This prevents the emergence of a truly inclusive global financial market and limits participation to a handful of institutions that can afford the necessary due diligence and legal procedures.
UMA contracts, on the other hand, are based on Ethereum’s blockchain, whose permissionless nature allows any user to create, run and trade digitized derivatives from anywhere in the world. This accessibility is especially important for the developing economies around the globe, where financial institutions are frequently far from maturity, forcing local market participants into relative isolation.
Where Can You Buy UMA [UMA]?
Brief: PancakeSwap is an automated market maker — a decentralized finance application that allows users to exchange tokens, providing liquidity via farming and earning fees in return.
What Is PancakeSwap?
PancakeSwap is an automated market maker (AMM) — a decentralized finance (DeFi) application that allows users to exchange tokens, providing liquidity via farming and earning fees in return.
It launched in September 2020 and is a decentralized exchange for swapping BEP20 tokens on Binance Smart Chain. PancakeSwap uses an automated market maker model where users trade against a liquidity pool. These pools are filled by users who deposit their funds into the pool and receive liquidity provider (LP) tokens in return.
These tokens can later be used to reclaim their share of the pool, as well as a portion of the trading fees. These LP tokens are known as FLIP. PancakeSwap also allows users to farm additional tokens such as CAKE and SYRUP. On the farm, users can deposit LP tokens and get rewarded with CAKE.
PancakeSwap allows users to trade BEP20 tokens, provide liquidity to the exchange and earn fees, stake LP tokens to earn CAKE, stake CAKE to earn more CAKE and stake CAKE to earn tokens of other projects.
What Makes PancakeSwap Unique?
PancakeSwap uses an automated market maker model, meaning that there are no order books and liquidity pools are used instead. A user can earn income by becoming a liquidity provide; by adding their tokens to the liquidity pool they can farm LP tokens and stake their CAKE to earn rewards. They can also try their luck with the lotteries and non-fungible tokens.
The PancakeSwap token CAKE is a BEP20 token that originally launched on Binance Smart Chain. The main function of CAKE is to incentivize the liquidity provision to the PancakeSwap platform.
Users can stake their tokens to earn rewards, which is done by depositing Liquidity Provider tokens and locking them up. This is known as farming and is rewarded by the system with CAKE tokens. The tokens can be un-staked with zero holding time. CAKE gives users the opportunity to invest and increase returns in the future but comes with risks.
CAKE can be used to enter a lottery on PancakeSwap. Each lottery session takes 6 hours. A single ticket costs 10 CAKE and comes with a random combination of four numbers between 1 and 14, for example, 8-6-4-13. To win the jackpot, which equals 50% of the entire lottery pool, the numbers in your ticket need to match all four of the numbers in the winning ticket.
Users can also win non-fungible tokens that can be traded for CAKE or kept in a wallet.
Where Can You Buy PancakeSwap (CAKE)?
12) Pickle Finance
What Is Pickle Finance (PICKLE)?
Pickle Finance is a decentralized finance yield farming protocol built on the Ethereum blockchain. It was launched with the intention of helping to stabilize the one-to-one peg of stablecoins — such as Dai (DAI), Tether (USDT), USD Coin (USDC) and sUSD (SUSD) — by incentivizing participants to sell above-peg stablecoins and purchase below-peg ones.
Pickle Finance is powered by a native ERC-20 token, PICKLE, that is used for governance and as a reward for liquidity providers.
The project appears to have been teased in August 2020 before officially launching in September 2020. In November 2020, Pickle Finance began the process of integrating with yearn.finance (YFI).
What Makes Pickle Finance Unique?
According to its “PicoPaper,” Pickle Finance is distinct from other yield farming projects because it offers a service to the community — the ability to stabilize stablecoin pegs, although the project has since expanded beyond this function — while other projects “don’t actually do anything.”
The project uses an incentive mechanism to help maintain the pegs, giving rewards in the form of PICKLE to those who provide liquidity to its stablecoin-Ether (ETH) pools. The incentive mechanism provides higher rewards for participating in a pool for an under-pegged stablecoin. Users can also send tokens to “PickleJars,” or pJars — vaults that use alpha-seeking strategies to generate returns that are returned to the pool, causing the total value of the deposit to increase.
Where Can You Buy Pickle Finance (PICKLE)?
Brief: BakerySwap is an all-in-one DeFi platform that provides both AMM and NFT Marketplace solutions in one place. Users can exchange tokens, provide liquidity, participate in liquidity farming, and also mint NFT and trade them.
What Is BakerySwap?
Quick Questions About Yield Farming
What is Yield Farming?
Yield farming is a way to generate rewards and earn yields on your cryptocurrency assets by securing them on a DeFi platform.
On most platforms, users deposit their assets in a liquidity pool or stake their assets via a smart contract. In return for providing liquidity to the platform via their assets, rewards and yield are generated in the form of the denominated token or a DeFi platform’s native token.
Most popular yield farms utilise an Automated market makers (AMM) model, in which assets can be traded automatically on a permissionless basis by using liquidity pools instead of a traditional market of buyers and sellers.
Why Yield Farming pays so much?
Yield farming is the new DeFi type of lending where altcoiners have been generating crazy returns for the past year or so.
- In yield farming, you lend your money to a trading platform with automated market-making (AMM).
- DeFi trading platforms rely on their liquidity being crowd-sourced like this.
- Because of that reliance they will pay a lot to get their liquidity in. Without it, there could be no trading.
- The more popular the platform gets, the more liquidity it demands, the more you can earn from providing it.
Clearly, if you want to keep earning as much as you can from your farming, you need to keep track of which platforms people currently trade on.
Your opportunity is on any platform where traders want to trade and where there is not enough liquidity to meet that demand.
Mat is the founder of cashtipsandtricks and has been working in the financial sector in Luxembourg for the past 10 years. He brings his insights as an investor and entrepreneur.