The Difference Between Staking and Yield Farming
Both yield farming and staking are attractive ways to earn passive income in crypto.
Before yield farming, there was staking, and before staking, there was mining. As the years pass by, blockchain developers find new ways of providing passive income opportunities where users can use existing capital to gain more crypto assets.
In 2020, yield farming became a special hit that thrived along with DeFi and all of its glamorous new features.
If you’re dwelling in the crypto world like me then you’ve heard about the DeFi movement where DApps created to manage all financial activities like central authorities such as Banks do.
Some intelligent brains took advantage of the DeFi movement to multiply their investment; this multiplying process is well known as Yield Farming.
So what is Yield Farming? Can anyone make more money using Yield Farming? Is Yield farming a better option than staking cryptos?
Before finding any answers, firstly, you have to understand what actually Yield Farming is.
What is yield farming?
Yield farming, alternatively known as liquidity mining, is a method of earning cryptocurrencies by temporarily lending crypto assets to DeFi platforms in a permissionless environment.
Decentralized exchanges are the main product of the DeFi market, and in order to facilitate trades, they rely on investors who are willing to assist them in this matter. When a yield farmer provides liquidity to a DEX like PancakeSwap he earns a portion of the platform’s fees, which are paid for by token swappers who access the liquidity.
Yield farmers contribute their assets for as long as they want. For the period, which can last as short as a few days or as long as a couple of months, the user will earn fees on a daily basis. The more he lends, the higher the rewards are.
To Yield Farming, first, you need a DeFi lending platform like Voyager DEX by The Columbus Token Project, which allows you to lend and borrow tokens.
What is staking?
Staking is a mechanism derived from the Proof of Stake consensus model, an alternative to the energy-fueled Proof-of-Work model where users mine cryptocurrencies.
Rather than spending electricity and hardware power to solve complex mathematical problems and confirm transactions, stakers lock up their assets to act as nodes and confirm blocks. The main goal of staking is not to provide liquidity to a platform but to secure a blockchain network by improving its safety. The more users stake, the more decentralized the blockchain is, and hence, it is harder to attack.
The only bad aspect is that staking does not offer such a good deal compared to yield farming. APY rates payout on a yearly basis, and they range between 5% to 15%. On the other hand, yield rates in LPs can go higher than 100% in some cases.
Yield farming vs staking
Staking and yield farming are two entirely different worlds that have different goals and purposes. While yield farming focuses on gaining the highest yield possible, staking focuses on helping a blockchain network stay secure while earning rewards at the same time.
So, how do you decide between yield farming and staking? If you are confident in your skills and believe that gaining more money in a short period of time is worth the risk, yield farming is naturally the right choice.
Otherwise, it might be better to participate in staking.
Voyager DEX — AAM Exchange,DEX Aggregator & Yield Farm
The Voyager DEX by Columbus Token Project is a Decentralized Exchange Protocol and DEX Aggregation Platform running on the Automated Market Maker (AMM) model, for the Binance Smart Chain (BSC) blockchain.
Users can swap their BEP-20 standard crypto tokens on the Voyager DEX by connecting their web3 wallets with the Binance Smart Chain network enabled. The platform works and similar to familiar DEXs such as PancakeSwap and Uniswap.
Users can add liquidity to existing token pairs in the liquidity pool and earn passive income. They can also add their own tokens and create token pairs and list their own crypto tokens for their projects. Each liquidity provider will be given Voyager LPs when they stake their tokens. They can redeem these tokens whenever they want by unstaking.
Voyager DEX is also a DEX aggregator that crawls across various DEXs on the BSC network and provides users with the best value for their trades. Even if sufficient liquidity is not found in the Voyager liquidity pools, the users can still swap their tokens.
Sailor Farms further incentivizes users for providing liquidity to Columbus Token (CBS) pairs, as well as other token pairs. Users can stake their Pancakeswap LP tokens on the Sailor Farms and earn a high-APR yield.