The Risk Of DeFi Yield Farming
The rise of Decentralized Finance (DeFi) has been explosive in dollar terms over the past year. The total value locked in DeFi on the Ethereum blockchain soared to nearly $200 billion last year. However, this impressive growth in dollar terms primarily reflects a positive valuation effect.
DeFi Yield farming gives you a new way to generate rewards from crypto. It might be challenging to benefit if you start or begin without adequate knowledge about it. Whichever one it is, you don’t have to panic or be scared. You can also benefit from yield farming, and that is why we have written all you need to know about DeFi yield farming below.
DeFi Yield farming is a process where you get rewards from your cryptocurrency by investing it in a DeFi platform. It is simply a process of allowing your crypto to work for you while you earn passively. Sounds lovely right? Yield farming works like a bank loan, where you are paid interest on the money you lent. You can lend out your crypto or borrow crypto from a platform that supports it in yield farming. Yield farming operates on smart contracts.
Risk Of DeFi Yield Farming
Just like everything that has to do with life, yield farming has its own risk. The higher the risk you take, the more profit you make. It is always advisable not to invest more than you can afford to lose.
Liquidity Risk
Liquidity risk occurs when the price of your loan is greater than the collateral you deposited. You run into loss if this happens. Liquidity risk is familiar with crypto with high volatility, such as BCH or ETH.
Smart Contract Risk
Defi protocols are open-sourced and can be open to bugs. These bugs can affect the token price, causing a high drop in the token price.
Gas Fee
An increased gas fee occurs on the Ethereum Smart Chain. The increase in ETH gas fees has been rising, which poses a challenge for an average investor.
Composability risk
Composability risk is also known as “money legos,” which means that all DeFi applications and platforms can interact without permission; the whole DeFi platform relies on each of its building blocks. Naturally, composability should not be a risk but an advantage. It is a risk because the entire platform can be down if any building blocks stop working.
About RoboFi
RoboFi (https://robofi.io/home/) is a Defi platform that envisions a marketplace for revolutionary Dao crypto trading bots. Through its IBO (Initial Bot Offering) system, community members can maximize their earnings in an easy, simple, and secure way. We create a safe and transparent environment based on blockchain technologies that help developers bring crypto trading bot platforms to the market. In addition, individuals will have easy access to these bot applications, thereby generating more earning opportunities. RoboFi ecosystem is fueled by the VICS token.
About VICS
VICS token has a distinctive and enticing concept. VICS is the BEP-20 token, built on the Binance smart chain. It is a core utility token in the RoboFi ecosystem, the reliable crypto trading bot marketplace. One important utility is to own the governance token of DABots and participate in an IBO (Initial Bot Offering) to receive additional incentives. VICS is available on major exchanges for trading.
Official Link
Website | Twitter | Telegram| Telegram News | Reddit | Litepaper
Most Popular
I'm Carina, a passionate crypto trader, analyst, and enthusiast. With years of experience in the thrilling world of cryptocurrency, I have dedicated my time to understanding the complexities and trends of this ever-evolving industry.
Through my expertise, I strive to empower individuals with the knowledge and tools they need to navigate the exciting realm of digital assets. Whether you're a seasoned investor or a curious beginner, I'm here to share valuable insights, practical tips, and comprehensive analyses to help you make informed decisions in the crypto space.
