Despite the growing DeFi enthusiasm over the past few months, a recent survey compiled by CoinGecko found that only 23% are actively engaged in some form of yield farming. However, many of the farmers responded that they do not know how to read smart contracts but enjoy high ROIs.
Yield farming is a growing trend
This year can confidently be classified as a decentralized finance (DeFi) boom. The rapid explosion in its popularity could to some extent be attributed to yield farming – the process of earning a return on investment by locking funds with specific protocols and receiving rewards.
Popular cryptocurrency data aggregator CoinGecko conducted a survey to shed light on users’ perspective and approach to digital assets, the DeFi sector, and yield farming in particular.
As the chart below shows, almost all respondents have heard of the two largest cryptocurrencies – Bitcoin and Ethereum. 94% have purchased at least one digital asset, while 81% have heard of liquidity mining or yield farming.
Attendees heard about BTC/ETH/yield farming. Source: CoinGecko
Interestingly, out of 1,347 respondents, only 23% said they had participated in yield farming in the past two months. According to CoinGecko, this suggests that yield farming is “still a niche but growing trend.”
The survey also showed that yield farming is mainly male-dominated (90%), while females accounted for only 6%. The remaining 4% chose not to answer (or were binary).
Male dominated yield farming. Source: CoinGecko
Farmers can’t read (Smart Contracts)
The past few months have shown that the DeFi field is not lacking in risk. Whether it was due to human error or hacks, numerous protocols failed, resulting in significant losses for investors.
Most study participants (79%) reported a “reasonable level” of understanding of the risks involved. However, 40% of yield farmers responded that they don’t know how to read smart contracts and 33% were unaware of the temporary loss.
According to CoinGecko, these results indicated that farmers cannot calculate their actual ROIs and are “extreme risk-takers for the sake of high returns.”
Still, 93% of respondents said they achieved massive ROIs of at least 500% with yield farming. CoinGecko commented that these results are “not a surprising find as many of the current new pools offer insanely high APY of over 1,000%. We believe that these high returns on offer are not sustainable as they come with a high level of risk.”
The big rewards for farmers mean they don’t mind paying the higher fees on the Ethereum network. Over 70% responded that gas fees of $10 or more per transaction seemed reasonable at the time.
behavior of the yield farmers. Source: CoinGecko
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