Most investors build and develop a cryptocurrency portfolio with the intention of holding those digital assets for a long time. This used to mean leaving those assets to sit idle within a cryptocurrency exchange or wallet. Fortunately, there are now a variety of platforms that allow those assets to accumulate yield and, therefore, expand an existing portfolio.
Yield farming is a term used within the cryptocurrency industry to define any opportunity that allows cryptocurrencies to earn interest. These opportunities may be packaged within a cryptocurrency exchange, crypto lending platform, or Decentralized Finance (DeFi) application. In this guide, we review and compare the best yield farming platforms available in the market and explain what to look out for when choosing a platform that can generate a yield from digital assets.
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Top Yield Farming Crypto Platforms: Reviewed
1. Coinbase - Best Yield Exchange For Beginners
A cryptocurrency exchange that has branched out to yield-farming products is Coinbase. Coinbase has grown to become one of the largest cryptocurrency exchanges in the world thanks to its beginner-friendly design and comfortable environment for cryptocurrency investors. It now offers a range of good yield-farming options for investors wishing that they could put their digital assets to better use.
Users can make money on crypto by simply holding certain cryptocurrencies within Coinbase’s application. Rewards in Coinbase are either paid out using interest, inflation, or staking mechanisms. While interest payments are accrued by lending digital assets to third parties, inflation and staking rewards are accrued due to Coinbase supporting the operations of blockchains. Although a minimum balance is required for all assets, minimum balances are low.
The exchange currently supports 7 different digital assets, which are composed of 5 cryptocurrencies and 2 stablecoins. However, the variety of rewards and cryptocurrencies varies based on location, so users will need to check which rewards are available upon opening the application. The frequency of rewards also varies with each cryptocurrency and ranges from daily to quarterly pay-outs. Cryptocurrency deposits are free, and withdrawals are charged at a flat rate.
Although the range of cryptocurrency support is low, users that earn yield through Coinbase can enjoy the exchange’s simple-to-use interface and detailed help guides that provide all the necessary information required to get up and running.
The exchange is also one of the most respected within the cryptocurrency industry and implements security procedures such as cold storage, 2FA, encryption, and the whitelisting of wallet addresses. In addition to security measures, the exchange is regulated and licensed within the US.
|Supported Cryptocurrencies||7 (5 cryptocurrencies, 2 stablecoins)|
|Interest Rates||Up to 5.75% APY|
|Term||Flexible, 1 or 3 months|
|Payout Frequency||Varies from daily to quarterly|
|Fees||None for deposits, flat fee for withdrawals|
2. Nexo - Best For Stablecoin Yield
One of the best yield farming platforms is Nexo, a crypto lending company that offers up to 32% Annual Percentage Yields (APYs) on a selection of cryptocurrencies. The platform is trusted by millions of users worldwide and currently holds over $12 billion worth of Assets Under Management (AUM).
Nexo’s earn module supports 32 digital assets in total, which includes 24 cryptocurrencies, 7 stablecoins, and the NEXO native coin (NEXO). Although cryptocurrency yields are market-leading and predominately range from 6% to 32%, where the platform really shines is the opportunities for stablecoin holders. Across the 5 stablecoins supported, which are all pegged to USD, the platform offers a minimum APY of 8%.
In addition to stablecoins, Nexo also offers users the opportunity to deposit 3 fiat currencies, USD, EUR, and GBP, directly to the platform which can then be converted to Nexo-native stablecoins. All 3 Nexo stablecoins can also generate a minimum yield of 8%, which provides a far higher rate of return when compared with leaving fiat currencies in a bank.
Nexo’s earning options are split between FLEX and fixed terms products. To achieve the highest rates of APY for either cryptocurrencies or stablecoins, a user must lock funds for a 1 month or 3 months fixed term. While Nexo is one of the best crypto platforms to earn interest that is accrued daily, interest for fixed-term products is only deposited at the end of each term. In comparison, all digital assets kept within FLEX, accrue yield daily and can be withdrawn at any time, however, APYs are on average 1% lower.
Although standard FLEX and fixed-term APYs are high in general, returns can be increased further by accepting reward payouts in the company’s native token, NEXO. This can increase rewards by up to 4% in some cases.
Nexo incentivizes the use of the NEXO token through a loyalty program that offers investors advanced benefits, such as even higher APYs and low-interest rates for loans. The loyalty program includes four tiers from Base to Platinum level. Tiers are defined by the percentage of a portfolio held in NEXO tokens. Silver tier is unlocked when a portfolio is comprised of 1% NEXO. Gold tier starts at 5% NEXO and Platinum tier starts above 10% NEXO.
Fortunately, for all of the benefits that Nexo offers, fees remain highly competitive. There is no charge for depositing fiat or cryptocurrencies and no charge for accruing yield. Every user is allowed 1 free cryptocurrency withdrawal per month, but this can be increased to 5 free withdrawals upon reaching the Platinum tier. Fiat withdrawals are also free.
With regards to security, Nexo works with a range of leading companies, including Ledger, Bakkt, Armanino, and Amazon Web Services, to provide cutting-edge technology and ensure compliance with regulatory bodies. In addition to retail-focused security procedures such as Two-Factor Authentication (2FA) and biometric identification, all funds are stored with the institutional custodian, BitGo. A $375 million insurance policy is also in place to help recover lost funds.
|Interest Rates||Up to 32% APY, minimum of 8% for stablecoins|
|Term||Flexible, 1 or 3 months|
|Native Token Benefits||Yes|
3. Crypto.com - Best Yield Farming Options
Although Crypto.com is most well known as a cryptocurrency exchange, the vision for the platform has always been to offer services akin to a crypto bank. As a result, the company offers a range of yield farming opportunities, which are split between the platform’s centralized Crypto.com App and Crypto.com’s DeFi Wallet. If a user is willing to hold native CRO tokens, rewards can be extremely attractive.
Crypto.com’s App offers yield products for 49 different cryptocurrencies. All rewards are based upon the number of CRO tokens held within the App and the term period selected. Term lengths range from full flexibility to 3 months, which gives users complete freedom to choose how long they wish to lock assets away.
To earn the maximum APYs on offer, which is currently 14.5% for either DOT or MATIC, a user needs to hold over $40,000 worth of CRO and commit to locking assets away for 3 months. Unfortunately, there is a $30,000 limit on top-tier rewards. After $30,000 worth of a cryptocurrency has been deposited, all subsequent deposits accrue rewards based on a lower APY.
There are no fees for depositing fiat or cryptocurrencies into the Crypto.com App or accruing yield, however, withdrawal fees do apply for both fiat and cryptocurrencies. Withdrawal fees for fiat depend on the withdrawal method being used and cryptocurrency withdrawals are affected by associated blockchain fees. Each cryptocurrency also has an associated Crypto.com withdrawal fee added on top of network fees.
In addition to the earning opportunities within Crypto.com’s App, Crypto.com’s DeFi Wallet offers a host of DeFi-related yield farming products. The wallet is non-custodial which means that, unlike the Crypto.com App, cryptocurrencies deposited into the wallet remain in the custody of individuals.
Thanks to the wallet’s ability to connect to a variety of blockchain ecosystems, the wallet can simplify the process of supplying liquidity to decentralized applications, such as Aave, Compound, and Yearn.Finance. Crypto.com is also a top staking platform that simplifies the process of staking coins within Proof-of-Stake blockchains such as Crypto.com’s native Crypto.org Chain (CRO) and the Cosmos network (ATOM). The APYs available within Crypto.com’s DeFi Wallet range from 1% to 14% depending on the cryptocurrency.
There are no fees for using the DeFi wallet, but as all transactions are completed on-chain, a blockchain gas fee will always need to be paid. This will vary depending on the congestion of the associated network. It is also important to note that cryptocurrencies deposited into yield products within the DeFi Wallet are being shared with either third-party DeFi applications or blockchain protocols and, therefore, the process carries slightly more risk than those deposited through the Crypto.com App. However, it also means that rewards can be higher.
Both the Crypto.com App and Crypto DeFi Wallet enjoy the same security measures protecting the entire Crypto.com ecosystem. Both applications can be secured by 2FA, email notifications, and six-digit PIN codes. The company is regulated and abides by all financial laws within the US.
|Interest Rates||Up to 14.5% APY|
|Term||Flexible, 1 or 3 months|
|Native Token Benefits||Yes|
4. Yearn Finance - Best DeFi Yield Platform
Outside of centralized yield-farming platforms, Decentralized Finance (DeFi) applications provide another avenue to explore for those hunting yield-earning opportunities. DeFi applications offer traditional banking services, but each application is built on top of a blockchain. Thanks to smart contracts, these applications are automated and are not controlled by a centralized entity. Users can also remain in full control of their funds at all times.
Importantly, the majority of the services in DeFi function thanks to liquidity provided by users. In return for providing liquidity, liquidity providers are rewarded with either a share or transaction fees, or native governance tokens.
While this means there are thousands of opportunities to choose from, due to the vast number of DeFi apps, built across multiple blockchains such as Ethereum, Solana, and Polygon, earning yield is not a straightforward process. This is why Yearn Finance was developed. Yearn Finance aggregates and optimizes yield-farming opportunities and, therefore, simplifies the process for investors.
One of Yield Finance’s main products is called yVaults. yVaults are similar to crypto savings accounts and generate an APY based on the investment strategy employed at the time. Each vault works with multiple DeFi protocols to optimize the returns of deposited cryptocurrencies. By depositing cryptocurrencies into a yVault the process of chasing the best DeFi yields is automated. As a result of the optimization and yield-earning potential of DeFi, APYs range from 1% all the way up to 45%. However, due to changes in strategy and liquidity, APYs can change daily.
There are currently 45 yVaults listed on Yearn Finance. Even if an investor does not hold the correct cryptocurrencies for a Vault, Yearn Finance offers a tool called Zapper, which can instantly exchange one cryptocurrency for another ahead of depositing it into a Vault. When it comes to removing assets from Yearn Finance, Zapper can also convert deposited tokens back to one of either ETH, WETH, DAI, AAVE, USDT, USDC, or WBTC.
For providing and maintaining yVaults, Yearn Finance collects a 20% performance fee from the yield generated from each Vault. There is also a 2% annual management fee. All APYs listed on Yearn Finance take into account both the performance and management fees.
It is important to remember that Yearn Finance is a DeFi protocol, that leans on other DeFi applications to generate yield. As a result, using Yearn Finance is considered slightly more risky than a centralized platform such as Nexo or Crypto.com. Before using the protocol, investors should become familiar with the risks involving liquidity provision, such as impermanent loss. If problems occur there is also not a customer support line to call and the immutability of smart contracts could mean that mistakes are irreversible.
5. Beefy Finance - Runner-up DeFi Platform
The final yield farming platform on our list is another DeFi-based protocol called Beefy Finance. Beefy Finance is another yield optimization platform that searches for the best returns across a variety of DeFi applications. As all DeFi applications are permissionless, Beefy Finance aims to simplify the process of yield farming and allow investors to generate returns while retaining custody of all funds.
Like Yearn Finance, Beefy’s main products are called Vaults. Each Vault is associated with either one or a set of cryptocurrencies, which work with a complex strategy for optimizing yield and reinvesting returns. However, this complex strategy is not witnessed by investors. An investor simply deposits cryptocurrencies into a Vault and the complex strategy interacts with DeFi applications in the background.
Unlike Yearn Finance which is compatible with 3 blockchains, Beefy Finance offers compatibility with over 10. Now marketed as a “multi-chain optimizer”, this means that Beefy Finance offers yield-earning opportunities for a wider range of digital assets. Based on the complexity of strategies employed and the demand for the liquidity provided, APYs range from 5% up to hundreds of percent. All APYs are listed next to each Vault within the application.
Reward payouts are distributed multiple times are day and are distributed in the same cryptocurrency/cryptocurrencies as those deposited. While the majority of Vaults allow the withdrawal of cryptocurrencies for free, some Vaults do implement a withdrawal charge. However, cryptocurrencies can be withdrawn from a Vault on Beefy Finance at any time and if there are no withdrawal fees, transactions simply incur the associated blockchain gas fee. For the services provided by each Vault, Beefy Finance collects 4.5% from all rewards, which are automatically deducted.
The security of Beefy Finance and its Vaults are consistently checked by developers and audited by external parties. However, like all yield farming platforms, including centralized platforms, Beefy is not entirely risk-free. Although security is placed as a top priority and the application has never been hacked, any bugs within the smart contracts that Beefy relies on or successful breaches by malicious parties could result in a permanent loss of funds. With that being said, Beefy Finance provides another excellent starting point for those interested in earning yield from DeFi applications.
Cryptocurrency Yield Farming Platforms Compared
The table below compares our top picks for crypto yield farming platforms. For more information, read the dedicated reviews on each yield platform.
|Exchange||Crypto Assets||Trading Fees||Rating||Promotion||Website||Review|
|$5 BTC bonus (USA only)||Visit Coinbase||Coinbase Review|
|$25 Bitcoin for >$100 deposit||Visit Nexo||Nexo Review|
|250+||None (3.5% surcharge for credit card)|
|None available at this time||Visit Crypto.com||Crypto.com Review|
|None available at this time||Visit Celsius||Celsius Review|
|None available at this time||Visit Yearn Finance|
|None available at this time||Visit Beefy Finance|
What is Cryptocurrency Yield Farming?
Yield farming is a popular method for investors to maximize the returns on their cryptocurrency coins or tokens by leveraging decentralized finance systems. Crypto owners can deposit assets to provide liquidity for cryptocurrency exchanges for others to lend, borrow and exchange for other coins. In return, they will receive a return in the form of interest paid back or a portion of the user's trading fees. The earnings are paid in the native cryptocurrency which allows the owner to accumulate more coins and tokens for their portfolio.
Once the asset owner receives the additional coins they can be staked or lent out. It’s also possible to exchange them for another token, coin, or fiat currency while stored on the exchange. By locking cryptocurrency tokens into a pool, and allowing them to be used for various purposes, an investor has the ability to earn income on these assets that are typically higher than a traditional savings account with a bank.
How Does Crypto Yield Farming Work?
Yield farming can be carried out using a reputable yield farming platform that can comprise centralized crypto exchanges or decentralized providers. Essentially, both methods involve two components that are the liquidity provider (i.e. an investor that owns crypto) and a liquidity pool (i.e. a crypto exchange or DEX).
Using a cryptocurrency trading platform, the investor delegates their crypto assets to combine in a liquidity pool. The liquidity pool contains deposits from various persons that are then used by others to lend, borrow or exchange tokens. When another party borrows or uses funds from the liquidity pool, they will incur fees that are paid to the liquidity provider. The distribution of the interest or fees earned is based on the allocation of funds provided to the pool.
Depending on the platform with the liquidity pool, it’s possible to receive payouts in tokens on a regular basis. Some platforms payout each day, while others compound daily but might only distribute the rewards once a week or month. The image below shows the liquidity pools available on the crypto trading platform, Binance.
Different Types of Crypto Yield Farming Platforms
Yield farming platforms can be thought of as any provider that can offer users the ability to put digital assets to work and earn a return on investment. This can include cryptocurrency exchanges, crypto lending platforms, and DeFi applications.
- Cryptocurrency exchanges. These offer a range of yield-earning products. Like crypto lenders, crypto exchanges can lend cryptocurrencies to third parties to generate a yield for users or act as a middleman between retail investors and blockchains/DeFi applications. Exchanges often fulfill the role of a validator within Proof-of-Stake blockchains and can also help users contribute funds to the liquidity pools of DeFi apps.
- Crypto lending platforms. Developed purposefully to connect lenders with borrowers. These centralized companies loan digital assets to third parties or retail investors to generate a yield for lenders. Many lending platforms have now also branched out to include other services such as cryptocurrency swaps or crypto-backed Visa cards.
- DeFi applications. This is where the term yield farming first originated. These applications, built using smart contracts, try to decentralize traditional financial services, such as buying, selling, exchanging, and trading. All of these applications require liquidity, which is usually provided by individuals. For depositing liquidity and fulfilling the role of a market maker, users are rewarded with a share of all transaction fees. Continually moving liquidity from one DeFi application to the next in search of the best returns is better known as yield farming.
How To Choose A Crypto Yield Farming Crypto Platform
As a result of the range in yield farming platforms for crypto, picking the right one is not always straightforward. Fortunately, there is a list of factors that all investors can use to sort the good from the bad.
- Supported cryptocurrencies. Not all cryptocurrencies are supported by all platforms. Reviewing the choice of supported cryptocurrencies can quickly reduce the choice of yield farming applications.
- Security. All yield farming platforms require users to deposit cryptocurrencies, which means that security should be high on an investor’s checklist. For centralized platforms, check that the security measures are market-leading. For decentralized applications, check if the protocol has been audited. In addition to security checks, review the history of a platform to see if any breaches have occurred in the past.
- APYs offered. The idea behind yield farming is to generate a return from digital assets. As a result, it is often a good idea to compare the rates of return between competing platforms. If all other factors are equal, higher APYs could be the determining factor.
- Lock-up periods. To access the highest APYs on certain yield farming platforms, a lock-up period is often required. This may not be attractive for investors that wish to keep assets liquid. Lock-up periods can vary considerably between platforms and should be checked before cryptocurrencies are deposited.
- User-friendliness. Putting digital assets to work should not be a confusing process. Top yield farming platforms should simplify the process and make it easy to understand what is happening and how to get involved. If a platform is confusing, it is often best to walk away and search for an alternative.
- Fees. While some yield farming platforms generate revenue from investments, others will charge retail investors for certain services such as withdrawals. Determine what fees are charged by a platform before depositing any cryptocurrencies, as all fees will eat into the yield earned.
What Is The Best Yield Farming Crypto?
Yield farming makes use of a variety of protocols that offer rewards and incentives for providing liquidity. In many cases, a yield farmer can expect to receive the associated token as an interest payment. Additionally, some protocols divide user fees among liquidity providers on top of offering an interest payment. Here are the most well-known protocols for individuals to participate in and earn a return for providing liquidity.
- UniSwap. A Decentralized Exchange (DEX) that allows anyone to swap any ERC-20 token. It’s even possible for those in the blockchain ecosystem to launch their own tokens on Uniswap. Uniswap offers a portion of the transaction fees, in proportion to a provider’s position in the liquidity pool, as well as UNI governance tokens as rewards to participants. In short, it is one of the best yield farming cryptos.
- Compound. Another decentralized finance protocol that operates on the blockchain. The purpose of the protocol is to allow individuals to lend and borrow assets. The algorithm adjusts the compound interest rate that lenders receive as a result of letting others use their crypto. On top of receiving a return in the form of interest from borrowers, lenders also receive rewards in to form of the COMP governance token.
- Aave. Lending and borrowing protocol on the blockchain that is decentralized in nature. In order to participate, a lender first needs to convert their assets to Aave and lend using that token. Then, lenders receive interest and payments in Aave tokens as a form of return.
- Curve Finance. An Ethereum-based protocol that offers a decentralized platform based on exchanging stablecoins and wrapped assets (like wrapped Bitcoin). There’s low slippage with this exchange, as well as relatively low fees. Stablecoins such as Tether and GUSD are pegged to a specific asset, the values aren’t as volatile compared to other DeFi protocols.
- Yearn Finance. The platform uses an algorithm to compare various protocols and determine where an investor is likely to get the best yield. An investor can join Yearn.Finance, decide which assets to use, and the algorithm will determine where the assets will earn the highest yield.
Are There Risks With Using Yield Farming Platforms?
While there are benefits of providing liquidity and earning higher than average returns, there are several risks involved in yield farming that should be researched as part of a due diligence process. Some of the common risks associated with farming yield in liquidity pools include:
- Fraud. Not every DEX, token, or liquidity pool is legitimate. An investor might be invited to a project, only to stake their tokens in a pool that is taken by individuals behind the exchange or protocol.
- Cyber theft. Depending on the situation, there might be vulnerabilities in the software used to manage assets. Someone could potentially hack in and steal others’ digital assets. Another concern is if a user reveals their keys, allowing for someone to access the wallet and steal crypto assets.
- Regulation. Crypto assets and exchanges are relatively new and faced with uncertainties and risks associated with Governments and regulatory bodies. Depending on how these assets are regulated in the future, a liquidity provider's funds could be frozen if the exchange was locked-down by the authorities.
- Buggy contracts. Liquidity and yield farming mainly rely on smart contracts for execution. As the transactions are stored in DeFi blockchain protocols, any bugs in the code can pose problems that can cause the platform or a protocol to have downtime or be vulnerable to hackers. This was the case for Compound, which suffered one of the biggest DeFi hacks due to an incorrect piece of code wrongly distributed over $150 million worth of native COMP tokens.
- Frozen assets. Depending on the situation, a liquidity provider's assets could be locked up. An investor can’t withdraw or exchange the funds as it’s being used elsewhere. Many liquidity pools allow investors to withdraw their share of the pool at any time. However, as long as a yield farmer wants to earn a return, the tokens must remain in the pool. When an investor lends assets, they won’t have access to the tokens until they’re returned, or until they begin receiving loan payments in the agreed-upon token.
- More participants. Because yield farming can be so lucrative, it has the potential to attract more participants. The more people who join a liquidity pool or get involved in some other way, the more diluted an investor’s return will be. If there are 10 people providing liquidity in a pool, the user fees will be split 10 ways. However, if that pool rises to 20 people, then the user fees are split even more ways, with each investor’s share decreasing.
- Price volatility. Tokens are volatile in price, changing regularly. If the price of a token moves higher, an investor sees a much bigger return. However, if the price drops, an investor might still have many tokens, but they might not be worth as much. For example, if, instead of the price of the tokens in the above example rising, they dropped to $0.15, the investor would still have 23,200 tokens, but they’d be worth $3,480. With an initial investment worth $10,000, that represents a loss of 65.2%.
- Impermanent loss. This situation describes what happens when a liquidity provider could have made more money by simply selling their tokens on the market. However, this is usually temporary, based on price fluctuations.
Frequently Asked Questions
Based on our reviews, the best yield farming platforms are Coinbase, Nexo, Crypto.com, Yearn Finance and Beeft Finance. These yield farms enable beginners and experienced traders to apply yield farming strategies to extract high APYs from digital assets.
Yes, yield farming can be a profitable investment strategy for investors that delegate their assets for a long period of time. The returns for depositing crypto assets into a liquidity pool can be as high as 100% APY, however, the pay-outs can vary in frequency.
The APYs from yield farming are high due to a variety of factors including the demand for crypto, increased risk, and market inefficiencies. Yields offered by most platforms are dependent on the demand for the coin and the opportunities to generate yield, such as capitalizing on variations in market prices.
Additionally, unlike banks, many crypto yield platforms do not need to keep a minimum reserve of assets in place for high-risk liquidation events. This means that yield platforms can put more funds to work.
For those that prefer using a DEX, liquidity pool farming is similar to yield farming. However, the person will provide liquidity to a decentralized exchange (DEX) instead of a centralized platform for others users to swap their tokens. When an individual deposits their tokens, they are referred to as a liquidity provider. The tokens are held in a liquidity pool governed by a smart contract. A yield farmer commits tokens to the pool and this provides liquidity so that the DEX can operate smoothly.
The return for a yield farming product is calculated using the estimated performance over a 52 week period, which will either include or exclude the gains as a result of compounding. Returns that do not include compounding are represented as Annualised Performance Rate (APR). Rates with compounding are generally reflected as APY.
Yield farming platforms provide great options for cryptocurrency investors that are sitting with idle digital assets. Earning yield allows investors to enjoy the potential long-term growth of cryptocurrencies, while consistently inflating a portfolio with time.
However, even across the yield farming platforms listed above, it is clear to see that substantial differences exist. It is, therefore, important to choose a platform that you are comfortable using. Use the factors within the article to help you choose the right platform for your needs. Perhaps it will be one from the list above.