👩‍🌾Yield Farming Basics

How does a yield farm work?

A yield farm holds your deposited tokens in exchange for a share of the emissions of the farm's native token. The return on your investment is derived from the price of the native token, your share of the liquidity in a pool/farm, and the percentage of total emissions that go to that pool.

But how are the rates so high??

The APRs in a yield farm are directly linked to the native token value. If the native token is performing strongly, farming will be very profitable!

What is a multiplier?

The multiplier on a pool is the relative share of total emissions that go to that pool.

• For instance, if there are 10 pools, and 9 of them have a 1x multiplier, and the 10th has a 10x multiplier, each of the pools with a 1x multiplier would receive 1/19 of the total emissions of the farm.

Why is the APR on the house token so high?

The house token receives a large multiplier to incentivize holding. Native tokens are typically the highest risk with the highest potential reward in a yield farm. There can easily be large pumps due to a yield farm's growth, but there can also be large dumps when people want to pull out their profits. Timing is important, and so is risk management. As with any other investment in cryptocurrency, never invest more than you are willing to lose in native tokens!

I just deposited into a pool/farm and the APR went down?

Before depositing into a farm, check the liquidity. When you deposit, you will be diluting this liquidity.

• APR = oldAPR * liquidity / [liquidity + deposit]