FINANCE (DeFi)

The yield farmers (What is Yield Farmers) develop an innovative modality where they use advanced strategies to earn more returns or rewards in the form of cryptocurrency through smart contracts. The main idea is to move your cryptos all the time between different marketplaces of "lending" (loan) to maximize their returns.

Yield Farming works when “LP’ ”liquidity provider users deposit funds in a Liquidity Pool. This reserve feeds a marketplace in which other users can take or request collateralized loans and exchange tokens, while there is more liquidity, the greater the amounts available for loans.

The use of these platforms contain fees, which are distributed to the “LP’ ”liquidity provider users based on their share of the liquidity reserve. This is the basis of how an automated market maker “AMM” works (What is AMM).