The cryptocurrency world has various ways to help you generate passive income. While Crypto mining, HODLing, trading, and airdrops are some of the most popular options, there are also some comparatively new options like Yield Farming and Staking.
In this article, we will compare Yield Farming and Staking to know and suggest the best option for you. Direct comparison will be unfair for these two methods so let's start with some theory parts.
What is Yield Farming?
Yield farming is a relatively new method in the cryptocurrency space and it is still evolving. As such, there is no one-size-fits-all guide to farm produce.
Cryptocurrency yield farming is a process of earning interest on your cryptocurrency holdings by providing liquidity to the Decentralized Finance (DFI) protocol. In exchange for the supply of liquidity, users are rewarded with interest payments in the form of native tokens of the protocols supported by them.
Yield farming has become a popular way to earn passive income in the cryptocurrency space as it allows users to leverage their holdings to earn interest without having to sell their assets. Additionally, yield farming can be a way to maximize the return on your investment by providing liquidity to multiple protocols and earning a percentage of the total interest paid by those protocols.
To get started with farming, you need to deposit your cryptocurrency into a liquidity pool. Once your deposit is confirmed, you will be able to start earning interest on your holdings. The amount of interest you earn will depend on the specific protocol you are providing liquidity to, but it is usually a percentage of the total interest paid by the protocol.
What is Cryptocurrency Staking?
Cryptocurrency staking is the process of holding funds in a cryptocurrency wallet to support the operation of a blockchain network. Essentially, stakes, or lockups, their crypto tokens help to validate transactions and create new blocks, thus earning rewards for their contribution to the network.
The more tokens a stacker has, the higher their vote weight and the more rewards they earn. Cryptocurrency staking is a process whereby users can hold digital currency in their wallets and earn interest on their holdings.
The interest earned from bets can be in the form of new coins, prizes, or a combination of both. To participate in staking, users must first have a digital currency wallet that supports the staking process.
Yield Farming vs Staking
Both these methods have their own way and goal of working and own distinct advantages and disadvantages. Therefore, a very conclusive result is not possible as it depends on the specific cryptocurrency in question.
Generally, cryptocurrency staking is the process of holding a certain amount of coins in a wallet to support the network and earn rewards.
Cryptocurrency yield farming, on the other hand, generally refers to the practice of using one's crypto holdings to provide liquidity for the Defi protocol to earn yields.
Yield Farming is considered risky but provides returns in the short-term. On the other hand, stacking is more suitable for beginners. It is easy to understand and does not require a large initial investment. Furthermore, creating new nodes on the blockchain will always require coins.
I hope you will be able to decide which one will suit you best, with this comparison. Whether you choose Yield Farming or Staking there is one platform that will be best for you, its name is panKUKU and it is the biggest DEX project with a variety of DeFi products and services including Yield Farming and Crypto Staking. So hurry up and start earning from today! https://ido.pankuku.net