Why Ethereum’s Yield Farming May Be The Most Exciting Thing In Crypto Right Now

Ronaldo Marquez

2 years ago

3 mins read

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As the world of cryptocurrencies evolves, Ethereum (ETH) investors are beginning to take notice of the power of yields and their potential impact on the crypto space. Yields, in essence, are the payments investors receive for holding cryptocurrencies, and they can come in many shapes and forms.

How ETH Yields Could Revolutionize The Space

One of the most important things to understand about yields is that they exist on a risk curve. This means that the percentage of yield paid out to investors is a function of supply and demand, as well as the perceived risk associated with the cryptocurrency in question.

For example, a cryptocurrency with a limited supply and high demand is likely to have a higher yield than one with a larger supply and lower demand. Similarly, a cryptocurrency that is perceived as less risky is likely to have a higher yield than one that is perceived as more risky.

According to the crypto analyst and researcher Adam Cochran, this is where the potential of cryptocurrencies really shines through.

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I think most people in crypto don't fully understand or appreciate yields and what it can mean for the crypto space at large – as it's one of the things that gets me incredibly bullish on the space.

And it's part of why I think ETH still has a 20x+ in its future.

— Adam Cochran (adamscochran.eth) (@adamscochran) May 15, 2023

By creating non-dilutive yields through the use of fees, cryptocurrencies can offer investors a way to earn passive income without the risk of inflation. This is particularly important in a world where traditional investments like savings accounts and bonds offer little to no yield.

One cryptocurrency that is particularly well-positioned to take advantage of the power of yields is Ethereum. With its growing ecosystem of decentralized applications and smart contracts, ETH has the potential to generate significant fees for investors through its use as a platform for decentralized finance (DeFi) applications, according to Cochran.

For example, ETH staking currently offers yields in the 5%-7% range, while Synthtetix (SNX) staking can generate yields of up to 24% in external fees. Similarly, Curve (CRV) staking can generate yields of up to 15% in crvUSD fees. This means that billions of dollars in capital are now able to generate yields of more than 3% annual percentage yield (APY), which is a significant opportunity for investors.

This is particularly important in a world where traditional investment opportunities like savings accounts and bonds offer little to no yield. As more investors become aware of the potential of cryptocurrencies to generate high yields with acceptable levels of risk, this can likely drive more interest and investment in the space.

From HODLing To Yielding

In its recent post, Adam Cochran emphasized the importance of focusing on asset productivity and real yield in the cryptocurrency space. Despite the current narrative that fundamentals don’t matter and memes and rhetoric dominate the market, Cochran believes that one day, the true value of assets will become apparent.

According to Cochran, those who already possess assets have the advantage, as they stand to gain significant capital gains in addition to the 2% APY on the face value of the asset. This is particularly relevant in the cryptocurrency space, where prices can be extremely volatile and subject to sudden fluctuations.

Furthermore, Cochran predicts that as funds of increasing size start to realize the long-term potential of the cryptocurrency space, they will begin to invest heavily.

This influx of capital will fundamentally change the finance industry, and those who have acquired a significant number of coins before this shift will reap the benefits.

ETH following the market’s recovery on the 1-day chart. Source: ETHUSDT on TradingView.com

Featured image from Unsplash, chart from TradingView.com

Ronaldo Marquez

Ronaldo is an experienced crypto enthusiast dedicated to the nascent and ever-evolving industry. With over five years of extensive research and unwavering dedication, he has cultivated a profound interest in the world of cryptocurrencies.

Ronaldo's journey began with a spark of curiosity, which soon transformed into a deep passion for understanding the intricacies of this groundbreaking technology.

Driven by an insatiable thirst for knowledge, Ronaldo has delved into the depths of the crypto space, exploring its various facets, from blockchain fundamentals to market trends and investment strategies. His tireless exploration and commitment to staying up-to-date with the latest developments have granted him a unique perspective on the industry.

One of Ronaldo's defining areas of expertise lies in technical analysis. He firmly believes that studying charts and deciphering price movements provides valuable insights into the market. Ronaldo recognizes that patterns exist within the chaos of crypto charts, and by utilizing technical analysis tools and indicators, he can unlock hidden opportunities and make informed investment decisions. His dedication to mastering this analytical approach has allowed him to navigate the volatile crypto market with confidence and precision.

Ronaldo's commitment to his craft goes beyond personal gain. He is passionate about sharing his knowledge and insights with others, empowering them to make well-informed decisions in the crypto space. Ronaldo's writing is a testament to his dedication, providing readers with meaningful analysis and up-to-date news. He strives to offer a comprehensive understanding of the crypto industry, helping readers navigate its complexities and seize opportunities.

Outside of the crypto realm, Ronaldo enjoys indulging in other passions. As an avid sports fan, he finds joy in watching exhilarating sporting events, witnessing the triumphs and challenges of athletes pushing their limits. Furthermore, His passion for languages extends beyond mere communication; he aspires to master German, French, Italian, and Portuguese, in addition to his native Spanish. Recognizing the value of linguistic proficiency, Ronaldo aims to enhance his work prospects, personal relationships, and overall growth.

However, Ronaldo's aspirations extend far beyond language acquisition. He believes that the future of the crypto industry holds immense potential as a groundbreaking force in history. With unwavering conviction, he envisions a world where cryptocurrencies unlock financial freedom for all and become catalysts for societal development and growth. Ronaldo is determined to prepare himself for this transformative era, ensuring he is well-equipped to navigate the crypto landscape.

Ronaldo also recognizes the importance of maintaining a healthy body and mind, regularly hitting the gym to stay physically fit. He immerses himself in books and podcasts that inspire him to become the best version of himself, constantly seeking new ways to expand his horizons and knowledge.

With a genuine desire to become the best version of himself, Ronaldo is committed to continuous improvement. He sets personal goals, embraces challenges, and seeks opportunities for growth and self-reflection. Ultimately, combining his passion for cryptocurrencies, dedication to learning, and commitment to personal development, Ronaldo aims to go hand-in-hand with the exciting new era that the emerging crypto technology is bringing to the world and societies.

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