Yield farming is one example of a great DeFi investing strategy. It entails lending or staking crypto coins or tokens in exchange for interest or transaction fees as rewards. In this article, we are going to show you how to use PancakeSwap to search for yield farming investment options. Both high yield and low-risk options are available.
Farming is akin to lending money to the bank and receiving interest. However, it involves more risk and could be more complex. Nevertheless, farming is a DeFi concept that gives crypto enthusiasts ways of earning and expanding their portfolios.
Oftentimes, crypto users compare yield farming to staking. However, the former takes place in a more complicated environment. In many situations, yield farming is used with liquidity providers (LP) users. These users supply funds to liquidity pools in permissionless liquidity protocols such as PancakeSwap.
What is PancakeSwap?
PancakeSwap is a BSC-based Decentralized Exchange (DEX). The platform offers features that provide its users with earning and engagement avenues. For example, PancakeSwap features Liquidity Pools, Swapping, and Yield Farming. In addition, the decentralized exchange has an NFT profile system, Syrup Pools, Automated Market Maker, and an Initial Farm Offering (IFO).
Furthermore, the DEX assists users in utilizing their crypto assets and expanding their earnings. Users can take advantage of the lottery, NFT collections, yield farming, prediction, and trading. However, farming is one of the easiest ways to earn CAKE on PancakeSwap. Read this article on how to use PancakeSwap.
Farming on PancakeSwap
To begin farming on PancakeSwap, users need LP tokens to enter a farm there. In addition, each farm only accepts its exact token. For example, users can only supply CAKE-BNB LP tokens on a CAKE-BNB Farm.
Furthermore, everyone in the crypto space has their own needs. Aggressive farmers usually love to take risks and do not mind entering a high-risk farm. High-risk farms offer huge rewards but are volatile. The eye-catching rewards attract these aggressive farmers; however, conservative farmers want to keep things simple and easy. As a result, they search for farms with lower risk, mostly stablecoin based farms such as USDC/USDT or USDT/BUSD. To begin farming on PancakeSwap, users would have to search for the farm they desire based on their needs.
How to Search for a High-Risk Farm
Entering a high-risk farm is mostly an activity for aggressive farmers. However, the process of finding a farm is quite an easy task.
To begin, users have to visit the farming page. They can do this by copying the link and pasting it on their decentralized wallet dapp browser (Metamask or Trustwallet).
source: PancakeSwap
With the default Hot sorting, CAKE-BNB and BUSD-BNB are pinned to the top of the list. Users can sort the farms by APR to find the ones with the highest reward rate. This will allow the list of farms to be sorted by the highest reward.
source: Pancakeswap
After selecting APR, you’ll see the top 2 high-risk reward farms. FIGHT-BUSD and BCOIN-BNB are two farms with the highest risk and rewards.
Source: Pancakeswap
As always, you have to be aware of what token you are paid in and how volatile it is to see where your real returns come from.
How to search for low-risk farms
As mentioned earlier, farms with the lowest risks consist of stablecoins such as BUSD, USDC, and USDT. Searching for a low-risk farm isn’t different from searching for a high-risk farm. On the PancakeSwap page, sort your search by APR and scroll down. The farms with the lowest risk are low-risk farms. For example, the USDC-USDT farm has an APR of 4.39%, making it one of the low-risk farms. In addition, the USDC-BUSD farm has an APR of 3.2%. This means that low-risk farms can be searched based on their APR.
source: Pancakeswap
After finding their desired farms, users can proceed to add liquidity to get their LP tokens. However, it is important to understand farming before beginning the process.
CAKE Price
At the time of writing, the price of CAKE was trading at $7.09 with a 24-hour trading volume of $137,299,352. The token is also up by 3.98% in the last 24 hours.
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