Yield Farming DeFi Sees Consolidation and Increased Risk Awareness

Yield farming DeFi is a practice where users deposit crypto into decentralized finance protocols to earn returns. This return can come from trading fees, interest paid by borrowers, or newly issued governance tokens.

The process involves connecting a non-custodial wallet to a DeFi protocol, depositing one or two tokens into a pool or lending market, and receiving a receipt token that represents the user's share.

Users may then stake this receipt token elsewhere to earn additional rewards. Rewards accrue over time and can usually be claimed or automatically compounded by a vault.