2/13/🧵 Understanding APY and APR🧵 For example, 20% APR is not about earning 20% per day or week, but per year. At the end of 12 months you would have 20% of your deposit.3/13/🧵 The reward is more important than the APY🧵 Study the potential and tokenomics of the token you earn as a reward. When earning stables, you should be aware that it takes a large amount to earn large amounts. IE 2000UST with 19% APY earns 380 UST in 12 months.5/13🧵 Check the fees🧵 Some farms may charge high withdrawal fees that need to be considered. Read all documentation before investing tokens in a yield farm.6/13🧵 Yield farming CAN be profitable, but…🧵 Yield farming can be profitable under the right conditions, but it comes with a high level of risk. There is market volatility in both LP and Reward Token earned. In addition, there is a risk of carpet theft and fraud.7/13🧵 Stakes is about supporting a protocol/network🧵 I like to bet on passive income opportunities, but it’s important to understand its purpose and support the networks you enjoy using.8/13🧵 Yield farming is rewarded for providing liquidity🧵 While APY is great, it is important to provide liquidity to the protocols that deserve it and have earned your trust through careful research.9/13🧵 Gradual passive income is the goal🧵 Staking and farming is about earning incrementally compounded passive income to add value to a protocol or network.10/13/🧵 Borrowing for Farming🧵 Realistically, it’s difficult to make large amounts without borrowing. I find whale wallets tend to deposit network tokens as collateral and borrow stable to build LPs on yield farms. DYOR, HIGH RISK.
11/13/🧵 Time, Patience and Risk🧵 Both staking and yield farming require resources and time, typically several months to a year. Test it with small amounts and estimate how much you could achieve with larger amounts. Risky investments may need to be held for shorter periods of time.
12/13/🧵 Realistic Expectations🧵 It’s nice to fantasize about what we want to achieve with crypto investing, but it’s all about math and markets. It is important to keep your feet on the ground in reality, study, make personal forecasts, make forecasts and create risk management plans.
13/13🧵 Tools to help with yield farming🧵 (NOT sponsored or affiliated. DYOR. 🙏 ) @0xCoindix for finding opportunities @Weave_Financial for strategizing @Gravity_Finance for their yield farm management silo (in beta) @Route2FI for yield farming strategies + insights
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