What is LP farming?

The basic difference between staking and mining is the algorithm used to validate transactions and add new blocks to the blockchain .

DeFi staking is an additional way to earn profits from your cryptocurrency assets by leveraging on the benefits given by the decentralized finance platform . The theory of staking in a centralized and decentralized environment can be different from each other.

All these three methods are just ways of putting idle crypto-assets to work. Yield farming aims at gaining the highest yield possible, while staking focuses on helping a blockchain network stay secure, on the other hand, liquidity mining focuses on providing liquidity to the DeFi protocol .13 Şub 2022

While yield farming offers a better yield than staking , risk-averse investors might be more inclined to consider staking when weighing yield farming vs. staking strategies. The risks can be higher since transaction fees can add up and detract from returns.24 Ara 2021

LP farms. In an LP farm, a user deposits crypto into a smart contract that programmably facilitates a liquidity pool . Such a pool functions as a decentralized trading pair between two, or sometimes more, cryptocurrencies, and the trading is made possible by the crypto supplied by LPs.