Golden Observation丨 Yield farming farmers take more risk than they realize

Jinse Finance Blockchain, September 23 News Coingecko conducted a survey on the income farming of decentralized finance (DeFi) among 1,347 respondents through social media last month, and the results were somewhat unexpected.

First, 80 percent of these respondents said they had heard the term “yield farming,” with 23 percent saying they had traded yield farming in the past thirty days, and more than two-thirds were aged Between the ages of 30 and 59, the proportion of men is as high as 90%, which shows that income farming is still limited to a small number of users; secondly, for those respondents who have tried income farming, 60% said they are still engaged in income farming , which also shows that this market behavior does have some long-term staying power in the development process; the most surprising thing is that 52% of the survey respondents said that they all started with less than $1,000 in seed capital. Yield farming, and more than 90% of yield farming farmers surveyed said they had achieved returns of 500% or more. However, Coingecko believes that in the future, high yield farming returns may disappear from decentralized finance protocols as various projects compete for cryptocurrency users and their capital reserves, but some forms of yield farming may remain. down.

Golden Evening News | Important news on the evening of September 4: 12:00-21:00 Keywords: Central Bank of Ghana, Switzerland, Solana, OpenSea

1. The Central Bank of Ghana launched the electronic currency "e-Caidi";

2. Minister of the Swiss Confederation Embassy in China: will increase cooperation in digital currency, bank financial management, etc.;

3. Report: Cryptocurrencies create more than 10,000 jobs in India;

4. Data: Solana’s lock-up volume exceeded $4 billion, a record high;

5. OpenSea added Ethernity (ERN) as a payment method;

6. Data: September 3rd was the first deflation day of ETH, and the amount burned was 352 ETH more than the block reward;

7. Report: Bullish, a cryptocurrency exchange owned by Block.one, is suspected of insider manipulation. [2021/9/4 23:00:37]

However, the results of the survey also revealed something unexpected: 40% of yield farming farmers were unable to self-assess smart contracts (smart contracts here refer to the code that allows decentralized financial It relies entirely on auditing to assess risks and determine whether there are bugs or other fraudulent and malicious behaviors. Not only that, but because audits are expensive and time-consuming, many projects forego audits altogether, meaning farmers may be taking on more risk than they realize.

Jinse Finance live report Ahmed AI-Galaghi, managing director of Weiyou Dubai: Now each blockchain project is independent, the key is to make each blockchain exchangeable for value: At the 2018 FINWISE Tokyo Fun Wisdom Summit, Weiyou Ahmed AI-Galaghi, Managing Director of UDubai: In the IP industry, everyone pays attention to tokennizetion, and I think more attention should be paid to who will supervise them. We need a mechanism to judge the value of the token, so that the value can be quantified and qualitative, so as to solve the problem of value convertibility. Now each blockchain project is independent, the key is to make each blockchain value interchangeable. [2018/5/21]

In fact, if yield farming farmers are concerned that their cryptocurrency deposits are at risk, they at least need to properly identify these projects before committing their funds. All yield farming farmers should do their research on liquidity pools before farming, as there are many yield farming tokens whose source code is copy-pasted and likely presents greater risks, including code bugs and fraud.

Jinse Finance live report, Qifu Capital Investment Director Lan Hongming: Blockchain is not just a technology: Jinse Finance live report, Qifu Capital Investment Director Lan Hongming in Consensus Future on the Chain丨Blockchain technology application and innovation According to the forum, blockchain is not just a technology, it will cover various industries, but each industry is very different, there is no unified solution, the model of each blockchain is different, and its construction is also different. [2018/4/10]

From the survey results, it does confirm that yield farming is largely a niche activity, only those who have a certain knowledge base of cryptocurrency trading, business metrics and financial calculations and are familiar with the decentralized finance industry can benefit from it. benefit. Many successful yield farming strategies require cycling through different decentralized finance protocols in pursuit of the highest return over a given period of time. Although there are large market fluctuations in this field, some projects can indeed bring more than 1000% annual return on investment. Yield farming is a method of using digital assets in decentralized financial agreements to obtain the maximum potential return. .

But investors are reminded here that decentralized finance essentially consists of decentralized applications on blockchains that focus on financial activities and processes, such as those that provide liquidity through protocol developers. Users set up incentive programs, earn interest, etc.; and Ethereum transaction fees (that is, the fees users pay to send and receive tokens on the Ethereum blockchain and interact with decentralized finance protocols) have been going on for weeks Up, sometimes a single transaction needs to force users to pay more than $10 in fees.

Therefore, if investors do not plan accordingly, high gas fees may quickly eat up profits and even consume start-up funds—these risks must be paid attention to and considered by “farmers”!

Part of this article is compiled from cointelegraph

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