Yield Farming

Yield farming involves moving cryptocurrency between lending protocols, liquidity pools, and other DeFi instruments to earn the highest available interest or token rewards. Legitimate yield farming is a real DeFi activity, but the complexity and opaque nature of many protocols make it fertile ground for exploitation.

Scam-related risks in yield farming include: fake farming platforms that take deposits and disappear; smart contracts with hidden exit functions that allow developers to drain the vault; protocols that are exploited through flash-loan attacks, wiping deposited funds; and referral-based yield farming schemes that are structurally Ponzi, requiring constant new capital to maintain promised returns.

Consumers should only use audited, established protocols with long track records, understand that high promised yields come with proportionally high risks, never deposit more than they can afford to lose entirely, and verify that smart contracts have been independently audited by reputable security firms.