Welcome to another article from the Run The Chain Crypto Classroom. Today we’ll be discussing Top 5 Yield Farms 2022. Looking back in time, the Defi sector has experienced a tremendous growth rate in Total Value Locked assets since the end of 2020. As at the time of writing this, the TVL in Defi stands at 202.35 billion, a staggering 1,378% increase compared to 14.68 billion as of December 2020. Of the different reasons that could attribute to this massive growth, yield farming stays atop and has been the ‘rocket fuel of Defi.’
Yield farming is a subject of interest to many investors, crypto enthusiasts and experienced traders who aim to earn passive income from the liquidity they provide. It involves supplying liquidity to different pools while earning interest as incentives.
Defi platforms engaged in yield farming we can also call ‘Yield Farms’. Picking the right platform for yield farming is not only essential for every liquidity provider, but also users who want to utilize these platforms for a service. Each of these platforms varies according to percentage yield, token incentive and transaction fees. In this article, we’ll be looking at the top 5 yield farms that could guarantee you appreciable returns in 2022. Read on!
PancakeSwap (CAKE) is one of the most prominent decentralized exchanges in the Defi sector. Launched in 2020 on Binance Smart Chain, PancakeeSwap contains many yield farms with significant returns of 8% to 250% APR. It holds up to $7 billion in locked value from various defi projects. It also offers BSC token swaps, interest-earning staking pools, a gambling game where users predict the future price of BNB, and even non-fungible tokens (NFTs).
Yield farms on PancakeSwap are unique as they require you to stake two tokens to get the token corresponding to the liquidity pool of the farm. You can earn tokens only in the form of CAKE and not in the form of the liquidity pool’s token.
Uniswap is the second largest decentralized exchange with more than $5.4 billion locked on the platform. Due to its liquidity pool, the platform offers swaps with Ethereum and other ERC-20 tokens. Liquidity providers earn a significant return of 20% to 50% APR on their staking, together with a trading fee on every swap.
The smart contracts for Uniswap are on Ethereum, so Uniswap often has high gas fees. It however has the advantage of not requiring any identity verification from intending users. Uniswap is currently of two versions: Uniswap V2 and V3.
Curve Finance is the largest decentralized exchange (DEX) built on the Ethereum blockchain with a total value locked of $7.9 billion. The platform utilizes its locked funds more than any other Defi platform, and this lends to its efficiency in providing a stable market of swapping cryptos of the same value. Curve contains various stablecoin pools pegged with USD and other fiat currencies. It offers from 2.5% to 25% APR on any cryptocurrency deposited by liquidity providers. Although it also experiences the same risks as other DEXs, such as impermanent loss, that is very unlikely since it’s pegged to stablecoins.
Aave is the reigning Defi king. It is a cryptocurrency-based lending protocol with a total value locked at over $10 billion, according to defipulse.com. Aave is a decentralized platform launched on Ethereum blockchain (and the Polygon sidechain). It offers low interest rate crypto borrowing and lending.
Its borrowing rate is the best in the market as many liquidity providers have deposited a large sum of cryptocurrencies into Aave. Interest rate varies from 3% to 15% APR.
SushiSwap is another major decentralized exchange that allows users to trade cryptocurrency through its Automated Market Maker (AMM). Providing liquidity to SushiSwap, the platform will give the liquidity providers SLP tokens( SushiSwap Liquidity Pool Tokens). The platform offers swapping, staking, liquidity pools and so on.
While most of these platforms offer high returns from their yield farms. Traders must always understand that yield farming is also a risky venture. To choose the right platform, it’s essential for every trader to do their due diligence before venturing into yield farming. We also always like to stress that none of this article is soliciting financial advice.
Thanks for reading Top 5 Yield Farms 2022 from the Run The Chain Crypto Classroom. If you found this article helpful, don’t forget to like and subscribe!