About DeFi, Columbus Project’s Voyager DEX and Crypto Yield Farming
DeFi stands for Decentralized Finance, a new financial system built on blockchain.
DeFi is a general term given to decentralized financial services such as decentralized exchanges, decentralized money markets, decentralized insurance companies, etc. It aims to replace centralized financial services with autonomous organizations that allow everyone to participate.
Columbus Token is an interesting new DeFi project with a very specific goal in mind: to make it as simple as possible for new people to invest in DeFi. Here’s how they’re accomplishing that goal.
Columbus Token project is currently developing its Voyager DEX. The Voyager DEX is a Decentralized Exchange Protocol and DEX Aggregation Platform.
Columbus Token holders can use this platform to swap their BEP-20 standard crypto tokens and add liquidity to existing token pairs in the liquidity pool and earn passive income ( Staking). They can redeem these tokens whenever they want by unstaking.
Yield farming is a popular DeFi activity. Investors lock up tokens and stablecoins in DeFi protocols and earn money for doing so. It’s like keeping your money in a bank account, except that yield farming pays a good return, often as high as 8% to 10% per year, or even higher if you farm alt coins.
Need more info about Yield Farming? Keep reading..
What is Crypto Yield Farming?
Yield farming, occasionally also referred to as liquidity mining, is one of the latest hype trains within the DeFi space. The core idea of yield farming is generating passive income with your existing crypto. Essentially, what you have to do is lend out the crypto you own, and earn increased returns in exchange. Yield farming is already revolutionizing the way crypto traders operate, by replacing the strategy of ‘HODL’ing on to one’s digital assets instead of putting them to use.
How Does Crypto Yield Farming Work?
As mentioned before, in yield farming, a group of users put their own crypto assets into liquidity pools and generate yields. These users are known as the LPs, or the liquidity providers.
Now you might be wondering what a liquidity pool is. Well, they are sort of like marketplaces where you can borrow or lend out digital assets, and trade out one crypto for another. Liquidity pools are, in fact, smart contracts on a DeFi exchange platform that are programmed to hold funds. When a liquidity provider deposits their crypto into one of the liquidity pools, the code in the smart contracts makes sure they earn rewards in return. Usually the yields are a share of the trading fees the DeFi exchange hosting a liquidity pool charges.
So when liquidity providers deposit their funds into a liquidity pool of their choice, a fraction of the overall trading fees the exchange platform earns goes to them — in proportion to their share in the pools, of course.