The Process of Yield Farming and Staking might seem similar, but they are developed for different reasons.

Staking is part of Proof of Stake (PoS) consensus mechanism that needs network users to stake their coins in bid to ensure the network. Here, coins are staked for the validation of transactions with the help of PoS blockchain, which usually arrives with a reward or native tokens.

Some Proof of Stake (PoS) projects like Same coin protocol, rewards users with their governance token - vSamecoin (in turn for staking its utility token). Yield Farming has to do with liquidity providers. In order to partake, interested persons will have to supply certain cryptocurrencies to a liqudity pool for farm or get more lucrative profit. Unlike staking, Yield Farming does not have to do with Network security.

Yield Farming

DeFi Yield farming or simply called as Farming is a impact of DeFi actions to create participants gain tokens while using the crypto project’s DeFi applications. Each and every time a new project arises, it has evolved crucial that it shows brand new rewards or tokens to be attained by incoming users. And as more and more join in, the demand initiates to improve that effectively creates the project and its token drive up in value.

In simpler words, you give your crypto to the project via a liquidity pool and in return, you are rewarded with incentives. Since the risk is more elevated, so is the yield.

As you have taken the risk to invest in a basic start-up project with a relatively small market cap, little experience, and low trust rating, the team behind the project manages to be more than satisfied to highly reward those who accepted in their vision-mission-action.

Staking

DeFi Staking takes you a notch further from farming by permitting you to participate in the project’s governance, have voting rights, certain impact over the project’s designs and techniques among others. By being a core member of the crypto project, you participate in making the blockchain for the Proof-of-Stake coins (PoS).

As the actual amount of capital you inject into the network project is safe, clear, and specific, investor rewards are moderate and completely lower than yield farming.

Farming VS Staking

The goal of both is clearly that of gain, providing you an opportunity to invest your funds in start-up crypto projects that have small market caps with projected high-value returns in exchange for providing liquidity.

Yield farming can be inadequate and risky as you contribute to the liquidity pool for lending ideals. Staking may yet offer you, aside from profit, a sense of satisfaction for being part of a project’s blockchain construction.