7 Best Yield Farming Protocols of 2024

7 min read
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Explore our curated list of the top 7 yield farming protocols of 2024, each platform’s unique features and safety tips.

In the decentralized finance (DeFi) space, yield farming has emerged as a pivotal earning strategy, allowing token holders to maximize their returns without selling them. As we navigate through 2024, the competition among yield farming protocols is fiercer than ever. Each protocol strives to offer unparalleled features, security measures, and yields, making it challenging for users to discern which platforms truly stand out.

In this guide, we shed light on the top-yield farming protocols of 2024, delving deep into their unique offerings and the reasons behind their success.

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Top 7 Best Yield Farming Platforms in 2024

  1. Convex Finance
  2. Yearn Finance
  3. Aura
  4. Beefy
  5. Pendle
  6. Sushi BentoBox
  7. Penpie

What is Yield Farming?

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Yield farming, often called liquidity mining, is a strategy in DeFi where users stake or lend their cryptocurrency assets in a protocol to earn rewards. These rewards, typically in the form of additional tokens, are incentives for users to provide liquidity to the platform.

Unlike crypto staking, yield mining requires investors to deposit two different tokens. This is because the investor provides liquidity for a trading pair, such as USDC/ETH or DAI/USDC. In turn, investment returns will also be determined by the market value of both tokens. This is why yield farming is considered a high-risk, high-return investment option. Yield farming is available on both centralized and decentralized exchanges.

As the DeFi space has matured, liquidity mining has become popular for crypto holders to earn passive income, leveraging their existing assets for potentially high returns.

Criteria for Selection Top Yield Farming Protocols

Our meticulous selection process for the top liquidity mining platforms is based on a combination of factors. From user experience and interface design to robust security protocols, the yields on offer, and the trust they’ve garnered within the crypto community, we’ve left no stone unturned. Each platform on our list has demonstrated excellence in these areas, ensuring a seamless and rewarding DeFi experience for users.

Please note that the list below focuses only on decentralized yield farming on decentralized exchanges (DEXs). Now, let’s dive into our top picks.

List of Top 7 Yield Farming Protocols

1. Convex Finance

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Convex Finance – Curve and Frax Yield Optimizer

TVL: $1,868 million

Convex Finance has firmly established itself as the leading farming protocol. It’s a protocol built to enhance rewards for Curve Finance, Frax and Prisma Finance liquidity providers. By simplifying the staking process, this innovative DeFi project allows users to earn trading fees and claim boosted CRV rewards without locking up their tokens.

The platform introduces its own token, CVX, which further incentivizes participation and governance. With a focus on maximizing yield and minimizing complexities, Convex has quickly garnered attention, offering farmers an efficient way to optimize their returns. A user-friendly and feature-rich interface is also a solid advantage to cater to users using Convex.

2. Yearn Finance

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Yearn Finance Main Features

TVL: $325.32 million

Next on our list is Yearn Finance. Launched in 2020 by Andre Cronje, Yearn stands as a cornerstone in the decentralized finance (DeFi) arena. At its core, Yearn is designed to optimize yield farming by automatically reallocating users’ funds to the most profitable DeFi lending protocols such as Curve Finance. Its vaults employ specialized strategies to maximize returns, while the platform’s yTokens represent a user’s share in a liquidity pool.

3. Aura

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Aura Finance – Balancer Yield Optimizer

Chain: Multi-Chain

TVL: $308.55 million

Aura is the next platform that has made its mark in the yield farming sector. Designed to offer a seamless and efficient yield farming experience, Aura integrates advanced strategies to boost stakeholders’ yield potential and governance power on Balancer, one of the year’s most trending DEXs.

The platform’s native token, AURA, is used for governance and incentivization. With a user-friendly interface and a commitment to security, Aura stands out as a reliable choice for those looking to navigate the complexities of yield farming and maximize their DeFi earnings.

Read more: 11 Most Trending Decentralized Exchanges in 2024

4. Beefy

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Beefy Liquidity Pools

TVL: $187.29 million

The fourth platform is Beefy Finance, a multi-chain DeFi platform renowned for its automated yield farming strategies. As a multi-chain yield optimizer, Beefy Finance focuses on providing users with the best returns by automatically reinvesting yields to compound interest. The platform’s native token, BIFI, is central to its governance, allowing the community to drive its direction and innovations.

5. Pendle

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Pendle Yield Tokenization

TVL: $159.23 million

Pendle‘s unique take on yield farming has made it among the most standout DeFi projects to watch this year. Its innovative yield tokenization mechanism allows you to separate and trade future yields via its, providing flexibility in managing interest rate fluctuations.

By splitting the ownership of the underlying asset and its future yield, Pendle offers a novel way for users to optimize their returns on liquid staking tokens based on market predictions. Pendle is paving the way for new financial primitives in the decentralized finance ecosystem.

6. StakeDAO

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Staker DAO Staking Interface

TVL: $66.93 million

Stake Capital DAO is a revenue-sharing DAO that tokenizes Stake Capital’s DeFi services and uses staking derivatives to unlock additional decentralized products. The Stake Capital DAO distributes value generated by a basket of DeFi services to stakeholders.

Stake DAO curates the top strategies, staking protocols, and more into one intuitive dashboard, offering an easy way to earn more from your assets. Every strategy has a carefully weighted risk score, enabling everyone to participate on their own terms and risk appetites. From strategies based on stablecoins to Bitcoin and a comprehensive range of ERC-20 tokens, StakeDAO has everything you need to secure higher returns on crypto.

7. Magpie Ecosystem

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Magpie Ecosystem

TVL: $69.48m million

Last on the list, Magpie might be the dark horse on this list, but its performance speaks volumes. It is an ecosystem of DeFi protocols that provide yield and veTokenomics boosting services across multiple blockchain networks. The Magpie ecosystem consists of three small protocols: Magpie, Penpie, and Radpie, respectively built on top of Wombat Exchange, Pendle, and Radiant Finance.

You can choose to deposit your Stablecoins, BNB, Liquid BNB, frxETH, ETH, WOM, mWOM tokens, and more in single-sided boosted pools to earn high APR, while Magpie allows voters on the integrated protocols to cost-effectively acquire voting power and earn passive income at the same time through the MGP token.

Tips for Safe Yield Farming

Do Your Own Research (DYOR): Before diving into any yield farming protocol, it’s crucial to conduct thorough research. Understand the project’s fundamentals, its team, and its vision.

Beware of “Too Good to Be True” Returns: Extremely high returns can be a red flag. While they might be tempting, they often come with higher risks.

Diversify Your Investments: Don’t put all your eggs in one basket. Spread your assets across different protocols to mitigate risks.

Regularly Monitor Contract Interactions: Use platforms like Etherscan to monitor any interactions with the smart contracts you’re involved with.

Check for Audits and Their Results: Reputable projects often undergo security audits. Ensure you read these audits and understand any potential vulnerabilities. If a yield farming protocol has been audited by CertiK, and the results show no critical vulnerabilities, it gives you more confidence in the platform.

Last thoughts

The year 2024 is shaping up to be a landmark year for DeFi and yield farming protocols in particular. With platforms pushing the envelope and introducing groundbreaking features, the future of DeFi looks brighter than ever. By aligning with the right platform, you can not only optimize their returns but also ensure they’re treading on safe ground.

FAQ

How do I zero in on the best yield farming protocol?

Focus on platforms with a robust community, top-notch security, and impressive TVL. But remember, always do your due diligence before diving in.

Are there risks tied to yield farming?

Absolutely. While yield farming can be lucrative, it’s not without its risks, such as smart contract vulnerabilities and market fluctuations that may cause impermanent loss.

What is the Impermanent Loss risk in yield farming?

Another complex term to understand when yield farming crypto is ‘impermanent loss’. This relates to losses that occur when the value of the two deposited tokens changes in relation to each other. This is because the yield platform will need to adjust the balance of the tokens in the pool to ensure they are equally valued. Some platforms have implemented new liquidity pool designs to minimize impermanent loss.

What’s the significance of multi-chain protocols in yield farming?

Multi-chain platforms let users farm yields across different blockchains. This not only optimizes returns but also spreads out potential risks.

Why is a protocol’s TVL important?

TVL is an acronym for Total Value Locked, which means the total USD-valued liquidity locked in the protocol’s smart contracts. A higher TVL indicates more assets are locked in the protocol. This often suggests a high level of trust and stability for the platform.

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Disclaimer: This article serves informational purposes only and does not constitute financial advice. Conduct your own research before making investment decisions.