Introduction
Income farming is a type of business model that focuses on generating passive income streams from a variety of sources. This can include investments in stocks, bonds, real estate, or cryptocurrencies, among others. Income farming is an attractive option for those who want to make a passive income without the commitment of a full-time job. It can be a great way to supplement your current income, or even become your main source of income.
Earn on interest through a loan of funds
Both obtaining and extending a loan involve placing a participant’s funds in a liquidity pool, either as collateral or as a deposit. A farmer registers in a project that issues loans and transfers funds to another user who applies for a loan on the condition of subsequent payment of interest. The farmer’s income is bonus tokens received along with the loan interest.
Liquidity mining
Liquidity pool is a smart contract on decentralized exchanges (DEX) based on automated market making (AMM) technology. During trading, the ratio of tokens in the pool changes, as does the price of tokens. For example, a user purchases 100 ETH using an ETH/USDT pool. The volume of USDT in the pool increases, while the volume of ETH decreases. At the same time, the price of ETH is growing.
The participant providing liquidity receives two types of coins: profitable LP tokens, which serve as a share and confirmation that liquidity was provided to the pool, and “burn out” in the blockchain when the liquidity is withdrawn; and bonus tokens of DEX or DeFi protocols that serve as a reward for activity.
The pool can incentivize members to provide more liquidity for a particular asset through an increased reward in bonus tokens. The pool income commission is distributed in proportion to the funds deposited by the participants.
Farmers sell bonus tokens on the exchange in exchange for basic liquidity, which is again supplied to a certain pool, and bonus tokens are again awarded to participants. Such manipulations are performed as long as they remain profitable, overlapping the trading fees and commission fees of the Ethereum network.
Conclusion
Income farming is a great way to earn a living and create a steady source of income. It can be a great way to diversify your income and open up new opportunities. It can also be a great way to learn new skills and gain valuable experience. With the right approach and dedication, income farming can be a successful and rewarding venture.
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