Yield Farming And Staking Understanding Their Differences

There are some crypto terms which we use every day and to me i think they can be tagged under the investing terms, and these terms of phrase are Yield framing and Staking. So during my free hours I stumbled on a document that actually explains what these terms and all about, it started by giving a definition of what both words mean.

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Which it was said that Yield farming is a high-interest incentivization program for liquidity providers on DeFi protocols. Contributors to these protocols often receive rewards for contributing their tokens as liquidity to the liquidity pool. How does yield farming works you may ask? From what I could understand is it makes use of the automated market maker which when fed the automated market maker helps in the execution of these requests and updates the protocol.

While Staking was defined as the act of locking up a crypto asset on a proof-of-stake (PoS) blockchain, where holders lock their tokens to validator nodes and receive rewards in the blockchain’s native token. It spoke about the advantages of staking as it helps in strengthening the network, they closed on how to perform stake on defi platform and other crypto related platforms.

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