Crypto farming is the process of generating cryptocurrencies with the help of LP tokens. On staking LP tokens in the farm, certain APR is provided in terms of project own token and funds can be grown by harvesting and re-staking each day to get the high yield APY.
Crypto Farming includes multiple terms like harvesting, LP tokens, APR, APY, re-staking, compounding, swap, exchange, etc. Along with this, we will clear some of your doubts in the form of questions and answers.
What is Crypto Farming
Crypto Farming is a process of landing and staking crypto tokens on an exchange and earning interest in terms of crypto rewards. Crypto rewards or crypto interest is paid on the basis of APR.
APR can be converted into APY if rewards are harvested and re-staked on daily basis. But keep in mind that when you will harvest your crypto rewards and re-stake that, new APR charges will be applied to your initial funds.
What Is APR
APR stands for Annual Percentage Rates. It is the annual interest received by the stakeholder or lander. Suppose you stake some tokens on the blockchain, then blockchain will reward you some crypto on your staking funds. These funds are calculated on an APR basis.
Suppose you stake 100 tokens on any blockchain and APR is 85%, then at the end of the year, your reward and interest will become 185. Here, 100 tokens are your principal fund and 85 tokens are the interest received on your staking(100+85=185).
What is APY
APY full form is Annual Percentage Yield. APY is used in compound interest calculation. In crypto farming, annual percentage rates are provided. But in staking, an exchange may provide compound staking. Which yield performance is calculated in APY.
If the exchange is providing APR, then manual harvesting and re-staking can be done to obtain maximum yield from your investment.
Harvesting in Crypto Farming
Harvesting is a process of collecting crypto interest in the wallet from the exchange. Suppose you stake $1000 on Biswap.org exchange and daily $10 interest is given to you. Then you can harvest this fund for re-staking.
Hidden Truth of Crypto Farming
- High APY is obtained on harvesting and re-staking.
- On re-staking, we receive new APR rates, not old. Because harvesting reset the staking.
- Crypto farming provide APR rates no APY rates. You have to harvest and stake again.
- In 90% cases, if staking APR is more than 1000%, staking crypto price will droop. Suppose you purchase coin at $20 price, then price may drop up to $5.
- Staking or farming require many charges like approval charge, transaction charge, staking charge, etc.
- Crypto Farming rewards may drop as per the rewarded token price drop.
High Yield Crypto Farming
Crypto farming gives fixed or reduced annual interest based on many factors. Like staking, APR charges are not fixed, they vary with time. The main formula for generating a high yield is to harvest your interest funds and re-stake if APR rates are high.
Do not harvest less than $50 worth of crypto, as at least $2-4 will be deducted on re-staking and exchanging crypto funds.
If price and APR rates are going down, then don’t harvest your reward. It may reduce your total profit.
Crypto Farming APY Calculator.
What To DO in Crypto Farming?
- Invest the round figure amount, that you can take risk like $100, $500, $1000, etc.
- Invest for long term period like 1 Year, 5 Year, 10 Year, etc.
- Set a figure of interest to harvest and re-stake like $50, $100, etc. Because you have to pay transaction fee on harvesting, exchange and staking each time.
- Farm high yield crypto.
- Check the stability of crypto before harvesting like stable coin or exchange coin.
What Not to Do in Crypto Farming?
- Don’t harvest daily if your initial deposit amount is less than $1000.
- Don’t harvest or re-stake if your principal or LP token value is going down.
- If APY and APR rates are going down, don’t compound.
- Don’t sell funds before targeted period or profit.
- Learn new skills instead of waiting for loss to recover.
Best Decentralized Exchange For Crypto Farming
There are so many centralized and decentralized cryptocurrency exchanges providing facility to farm crypto. I am using Biswap.org DEX because it is paying the highest APR and APY with stable coin farming like BNB, BUSD, BSW.
Benefits of staking with BSW, BUSD, USDT, BNB, TKO, etc is that these are exchange tokens and stable tokens. Price of these tokens remains stable. So, there is no chance of loss in your initial funds. You may join the Biswap exchange through the below link:
Crypto Farming Vs Staking
| Crypto Farming | Crypto Staking |
|---|---|
| Crypto farming is a process of earning interest with the help of holding LP tokens. | Crypto staking is a process of earning crypto interest or reward by holding coins. |
| Farming mostly generates a reward in the form of an exchange token or coin. | Staking can generate interest in the same coin or can be rewarded in any other coin. |
| Crypto farming provides Annual Percentage Rates on LP tokens. | Staking provides both APR and APY interest. |
| Farming required 1 or 2 LP tokens to generate revenue. | It can be done with the help of individual coins. |
| To get a high yield, we have to harvest the reward and stake it again. | Here we can stake in Compound interest for the highest yield. |
| Farming provides High APY and APR. | Staking provides comparatively low APR and APY. |
| APY and APR rates are variable and can go up and down in farming. | Here APR or APY rates mostly go down. |
| The reward is calculated on the basis of the current APR. | Rewards change with APR or APY rates fluctuation. |
| High Yield is possible. | Less Yield is possible. |
| Little complicated to farm any crypto coin. | Staking is simple compared to farming. |
| Farming takes more initial charge. | Staking doesn’t need the high charge. |
Conclusion:
Crypto farming is a process to earn interest on your funds through staking LP tokens. It is similar to the fixed deposit process, but much better than the ordinary banking and centralized system.
Through crypto farming, you can take returns up to 5 times in 1 year. Here we are not talking about the increase in the price of cryptocurrency. Not only will the price of your currency increase, you can increase your coin’s quantity through farming. Here you can generate any third coins with help of LP tokens staking.
Currently, I am generating BSW coin with help of BUSD and LOA farming.
Also, Read:
Crypto Margin Trading For beginners.
Crypto Trading Tips And Tricks For Beginners.
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