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Key Differences Between Token Staking and Token Farming

Difference Between Token Farming & Token Staking

Farming vs Staking: Farming and staking are two different things and they both have different characteristics that distinguish them from each other. Let’s do a breakdown analysis and see how they differ.


Do They Differ in Exactly What Way?
Pros and Cons


Do They Differ in Exactly What Way?

Farming or Token Yield Farming is when an investor deposits his funds in the liquidity pool with the intention of obtaining returns that are calculated as APY. Let’s say he deposits his DAI in Harvest Finance and starts farming and will earn more DAI and iFarm. It can also be done when he deposits his funds on a loan platform like AAVE. Most investors get rewards in trading fees for providing trading liquidity.

Staking it is when the investor locks their funds to aid in blocking verification and they get rewarded for that. Suppose you buy Atomic Wallet Tokens and bet them on your Atomic Wallet for a period and then you will get your winnings. This is done as most tokens now use Proof of Stake and not Proof of Work.

Pros and Cons

These 2 operate differently and the risks involved are different. Yield farming is a lucrative investment, but it is also a high-risk investment because it involves non-permanent losses. You may end up regretting farming, and for that reason, the APYs on offer are so great.

Staking is safe as there are no risks involved, the only risk arises when you decide to stake your tokens on centralized exchanges and if those exchanges are hacked, you will definitely lose your crypto assets.

Conclution

These 2 have their differences, so if you are a high risk investor then yield farming is the way to go, but if you are that type of investor who does not want to take risks then the token staking is the one way forward.


Disclaimer

The information on this website is not intended to be financial, business, investment or other advice, and you should not consider the content of the website as such. trendsnews.in does not recommend that you buy, sell or hold any cryptocurrency.


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