We take a dive into yield farming which is serving as rocket fuel for the current growth cycle in DeFi. It’s a monumental shift in framing of how projects think about distribution to users and the power of financial incentives to bootstrap growth. There’s an influx of these incentive programs with over 20+ deployed across a variety of sectors and ancillary benefits are flowing down to areas like aggregators, insurance, tokenized BTC and more.

Key Takeaways:

  • Since mid-June when Compound lit the fireworks, TVL in DeFi has risen from $1.1bn to $6. 4bn as liquidity chases out-sized yields.
  • The yield farming rollouts of many projects are effective in bootstrapping short-term growth but are not optimized for long term sustainability of the respective protocols.
  • Liquidity is not sticky and follows the best yield opportunities.
  • Rising gas costs and the capital intensive nature of farming, are pricing out smaller players.



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