Yield farming is basically the art of trying to make the maximum possible return on your crypto by moving it between different DeFi protocols.
Imagine a farmer who chases the best soil each season. Yield farmers do the same—but instead of soil, they chase high returns (APY) across DeFi.
This leads directly to the next concept:
➡️ They switch strategies often to follow the highest yield.
The DeFi landscape changes constantly. A pool paying high rewards today may be mediocre tomorrow. So farmers “rotate crops”—they shift money between platforms.
In traditional finance, you might compare different savings accounts. Here, you compare APYs—Annual Percentage Yields.
This raises the next question:
➡️ Why are APYs in DeFi sometimes so high compared to banks?
Three ingredients create those spicy returns:
Protocols want people to use them. They bribe—okay, “incentivize”—users with free tokens.
If you use the protocol, you get rewarded with its native token.
This alone boosts your APY.