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Yield Farming is a way for holders of specific tokens to participate in token distribution events. The farming pools determine which tokens one will need to begin. Each Farm Pool has a daily reward rate and this reward is shared amongst all participants relative to their stake in the pool.
Single-Token Farming Pools are pools that do not require LP Tokens to participate.
Dual-Token Farming Pools are pools that do require LP Tokens to participate. These provide a higher reward rate.
While participating in yield farming, a holder earns the following:
- 1.Yield in the form of the tokens being distributed from the farming pool.
- 2.Yield in the form of fees accrued in the liquidity pool your tokens are participating in.
- 3.Appreciation/Depreciation of the underlying token assets being utilized.
- 4.L1 Network Rewards, if any.
Yield Farming is non-custodial, meaning participants retain control of their funds. Rewards are generated on a per block basis and are determined by calculating the APY against your total staked holdings.
APY for each pool is determined by the following equation:
((Daily Pool Reward * Reward Token Price)/ Total Value Locked) * 365 * 100% = APY%
APY is generally dynamic. It fluctuates with variations in price and TVL.