Crypto Yield Farming Reportedly Booming, and Investors Could See Up to 50% Returns – Or Watch Scammers Run Away With Their Investment | Currency News | Financial and business news

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Given Ruvic / Reuters

Yield farming is crypto’s answer to traditional lending, as noted in a recent Wall Street Journal report. A popular strategy is “cash extraction”, where the yield producers lock in tokens in exchange for fees. Between January and April of this year, investors suffered $ 83.4 million in losses related to DeFi fraud, according to CipherTrace. Sign up for our daily newsletter, 10 things before the opening bell here.

All investing involves a balance between risk and reward, but few are as risky or as rewarding as “yield farming,” a burgeoning segment of crypto that has once shamed people like Mark Cuban.

Yield farming, under decentralized finance, or DeFi, is crypto’s answer to traditional lending, as noted in a recent Wall Street Journal report.

As DeFi has grown parabolically – with assets stranded in projects collectively worth tens of billions of dollars – yield farming has also grown, spurred by low interest rates in other markets. .

Yield farmers have put capital in anticipation of excess returns, often in double digits. A popular strategy is “cash extraction”, where the yield producers lock in tokens in exchange for fees. In doing so, yield producers play a similar role to market makers like Citadel Securities in traditional finance, profiting from every trade but taking price risk if their stranded tokens skyrocket or collapse.

Yet yield farming, which is largely unregulated, is prone to scams or poorly designed products. Between January and April of this year, investors suffered $ 83.4 million in DeFi fraud-related losses, according to CipherTrace data cited by the Journal. In June, Mark Cuban “was hit” by a farm imploding. After peaking at $ 60, the underlying token became worthless, in what some have called a crypto-bank run.

“It sounds like the start of the Internet, with these weird, crazy things that aren’t going to exist in the long run,” Marcio Chiaradia, a yield farmer, told the Journal.

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