Farming, also known as yield farming, is a DeFi strategy where users provide liquidity or stake tokens in decentralized protocols to earn rewards, typically in the form of additional tokens. Farmers move capital between protocols to maximize returns, often chasing the highest annual percentage yield (APY).
Example
“The DeFi user deposited USDC and ETH into a Uniswap liquidity pool and earned trading fees plus bonus governance tokens — a common yield farming strategy that generated 25% APY.”