Yield Farming

Yield farming involves moving assets between DeFi protocols to capture the highest available returns — combining trading fees, lending interest, and liquidity mining incentives paid in governance tokens. It emerged during 'DeFi Summer' 2020, when Compound's COMP incentives triggered a wave of protocol-funded yield competition. High headline APYs are often unsustainable and driven by token emissions that dilute the rewarded token; real yield (from protocol revenue rather than emissions) is a more durable signal.