Back to blog
Crypto Basics

What is Crypto Yield Farming and How it Works?

Learn everything about crypto yield farming and how it works in this descriptive guide.
Token Metrics Team
6 minutes
Want Smarter Crypto Picks—Free?
See unbiased Token Metrics Ratings for BTC, ETH, and top alts.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
 No credit card | 1-click unsubscribe

In this guide, we will answer what crypto yield farming is and how to do it.

Yield farming is a revolutionary way of earning passive income through cryptocurrency investments. It is a relatively new concept and has gained much attention in the crypto world. Yield farming involves using your cryptocurrency assets and taking advantage of lending platforms, decentralized finance protocols, and staking pools to generate incentives for interest payments, rewards, and capital gains. 

In this descriptive guide to crypto yield farming, you'll learn about the different types of yield farming, the rewards available, and the associated risks. You can earn passive income through yield farming with the right strategies and knowledge. So, let's dive right in and learn about crypto yield farming.

What is Crypto Yield Farming?

‍‍Yield farming is a process of using your cryptocurrency assets to generate incentives in the form of:

  • Interest payments, 
  • Rewards, and 
  • Capital gains. 

In other words, it is a form of passive income from cryptocurrency assets. Yield farming can also be considered a strategic investment strategy that allows you to earn income from your idle assets by lending them to other users. This process is similar to how people earn income from their savings accounts. 

These idle assets that you can stake can be your:

  • Computer's processing power
  • A certain amount of coins from your portfolio, or 
  • A certain amount of tokens from your portfolio. 

But how is this beneficial to you? 

Benefits of Yield Farming

Yield farming offers a wide range of benefits for both individuals and businesses. 

  • For individuals, yield farming can be a great way to earn extra income. It can help you diversify your crypto portfolio and hedge against some of the risks associated with investing in cryptocurrencies by generating extra income from your idle assets. This is why they call it an excellent way to earn passive income, which is one of the core benefits of cryptocurrency. 
  • For businesses, yield farming can help you expand your customer base and increase revenue. You can earn income by lending your idle assets while helping people earn interest and build their crypto portfolios. Although yield farming was once primarily used by mining operations, it can now be done by individuals, organizations, and other entities that are involved with cryptocurrency.

How Does Yield Farming Work in Real-time?‍‍

So, what do you need to do to get started with yield farming?

To begin with, the yield farmers will need to deposit their coins or tokens into decentralized applications or dApps of their choice for the following: 

  • Crypto trading 
  • Lending, or 
  • Borrowing. 

A few examples of dApps include crypto wallets, DEXs, decentralized social media, and more. Since these investors enhance the liquidity in their chosen dApp, they're referred to as liquidity providers. The crypto that yields farmers' deposits into DeFi protocols gets locked into autonomous smart contracts.

Types of Yield Farming

There are three types of yield farming - lending, providing liquidity, and staking. 

Lending refers to lending your idle cryptocurrency assets to earn interest payments. You are generating revenue through interest payments when you lend your cryptocurrency assets. This process is similar to how people earn interest from their savings accounts. 

Providing liquidity to decentralized apps for traders to trade on can also generate you fees. However, keep in mind that there exists impermanent loss in the process.

Staking refers to lending your coins to earn rewards through coins and staking fees. You are generating revenue through rewards and staking fees when you stake your coins. Rewards can come in the form of coins, tokens, or other types of digital assets. You are lending your coins to earn rewards.

Types of Rewards Available

Rewards are the incentives earned when you lend idle coins and cryptocurrencies to earn interest payments and generate passive income. There are many different rewards available to those who participate in yield farming. Some include interest payments, votes, staking rewards, and airdrops. 

Interest payments: This is the primary reward generated by yield farming. Interest payments are generated when you lend idle coins and cryptocurrencies to other participants. 

Votes: This refers to the ability to vote on certain network issues. 

Staking rewards are rewards generated by staking crypto assets for a certain period. 

Airdrops: This refers to the free crypto coins and tokens resulting from participating in a certain network or blockchain project.

Is Yield Farming Safe and Profitable?

Now that you know the benefits of yield farming, it's also important to know the risks. This is because no investment is risk-free, and the same is true for yield farming. When you decide to earn income from yield farming, you must consider the risks associated with it. Some risks associated with yield farming include network, liquidity, counterparty, and regulatory risks. 

Network risk refers to the risk associated with the security of the network/blockchain and its ability to function as expected. 

Liquidity risk is associated with the ability to liquidate your assets when you need them. 

Counterparty risk refers to the risk associated with the ability of the person/entity with whom you have the contract to fulfill the obligations. 

Regulatory risk is the risk associated with the ability of the government to enact new laws that can affect your earnings.

Smart contract risk is the risk associated with the probability of smart contracts getting hacked due to a bug or backdoor.

That said, there are definitely risks involved that you need to be aware of.

Strategies for Yield Farming

There are many strategies you can use for yield farming. Some of them include lending your idle assets to earn interest payments, staking your coins to earn rewards, and using different DAFs to generate passive income.

Lending your idle assets: This is one of the most common ways to earn income through yield farming. You can use your idle assets, such as your computer's processing power, to lend them to others who need them. 

Staking your coins: This is another popular way to generate passive income through yield farming. You can lend your coins to earn rewards. 

Using different DAFs: This refers to the use of decentralized autonomous funds that can generate passive income.

What's Next for Yield Farming?

Yield farming is a dynamic space that tends to change quickly; it often requires vigilance and time for farmers to cull out the best possible strategies. However, for someone who can manage it, yield farming will be highly profitable in 2023, even in the bearish market.  

That said, yield farming is significantly risky with rug pulls, hacks, impermanent loss, etc.

So, choosing your battle is important before getting into the ring. 

Platforms for Yield Farming

Many different types of yield farming platforms are available for you to use.

You can use these platforms to take advantage of your idle assets to generate income through interest payments and rewards.

Some popular yield farming platforms include Yearn Finance, Lido, and Liquity.

The Bottom Line

Yield farming is a revolutionary way of earning passive income through cryptocurrency investments. It involves using your cryptocurrency assets to take advantage of lending platforms, decentralized finance protocols, and staking pools to generate incentives in interest payments, rewards, and capital gains. While lucrative, it can be a riskier investment depending on the platform you go for and the type of yield you are generating.

Build Smarter Crypto Apps &
AI Agents in Minutes, Not Months
Real-time prices, trading signals, and on-chain insights all from one powerful API.
Grab a Free API Key
About Token Metrics
Token Metrics: AI-powered crypto research and ratings platform. We help investors make smarter decisions with unbiased Token Metrics Ratings, on-chain analytics, and editor-curated “Top 10” guides. Our platform distills thousands of data points into clear scores, trends, and alerts you can act on.
30 Employees
analysts, data scientists, and crypto engineers
30 Employees
analysts, data scientists, and crypto engineers
30 Employees
analysts, data scientists, and crypto engineers
Want Smarter Crypto Picks—Free?
See unbiased Token Metrics Ratings for BTC, ETH, and top alts.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
 No credit card | 1-click unsubscribe
Token Metrics Team
Token Metrics Team

Recent Posts

Research

Moonshots API: Discover Breakout Tokens Before the Crowd

Token Metrics Team
5

The biggest gains in crypto rarely come from the majors. They come from Moonshots—fast-moving tokens with breakout potential. The Moonshots API surfaces these candidates programmatically so you can rank, alert, and act inside your product. In this guide, you’ll call /v2/moonshots, display a high-signal list with TM Grade and Bullish tags, and wire it into bots, dashboards, or screeners in minutes. Start by grabbing your key at Get API Key, then Run Hello-TM and Clone a Template to ship fast.

What You’ll Build in 2 Minutes

Why This Matters

Discovery that converts. Users want more than price tickers, they want a curated, explainable list of high-potential tokens. The Moonshots API encapsulates multiple signals into a short list designed for exploration, alerts, and watchlists you can monetize.

Built for builders. The endpoint returns a consistent schema with grade, signal, and context so you can immediately sort, badge, and trigger workflows. With predictable latency and clear filters, you can scale to dashboards, mobile apps, and headless bots without reinventing the discovery pipeline.

Where to Find The Moonshots API

The cURL request for the Moonshots endpoint is displayed in the top right of the API Reference. Grab it and start tapping into the potential!

How It Works (Under the Hood)

The Moonshots endpoint aggregates a set of evidence—often combining TM Grade, signal state, and momentum/volume context—into a shortlist of breakout candidates. Each row includes a symbol, grade, signal, and timestamp, plus optional reason tags for transparency.

For UX, a common pattern is: headline list → token detail where you render TM Grade (quality), Trading Signals (timing), Support/Resistance (risk placement), Quantmetrics (risk-adjusted performance), and Price Prediction scenarios. This enables users to understand why a token was flagged and how to act with risk controls.

Polling vs webhooks. Dashboards typically poll with short-TTL caching. Alerting flows use scheduled jobs or webhooks to smooth traffic and avoid duplicates. Always make notifications idempotent.

Production Checklist

Use Cases & Patterns

Next Steps

FAQs

1) What does the Moonshots API return?

A list of breakout candidates with fields such as symbol, tm_grade, signal (often Bullish/Bearish), optional reason tags, and updated_at. Use it to drive discover tabs, alerts, and watchlists.

2) How fresh is the list? What about latency/SLOs?

The endpoint targets predictable latency and timely updates for dashboards and alerts. Use short-TTL caching and queued jobs/webhooks to avoid bursty polling.

3) How do I use Moonshots in a trading workflow?

Common stack: Moonshots for discovery, Trading Signals for timing, Support/Resistance for SL/TP, Quantmetrics for sizing, and Price Prediction for scenario context. Always backtest and paper-trade first.

4) I saw results like “+241%” and a “7.5% average return.” Are these guaranteed?

No. Any historical results are illustrative and not guarantees of future performance. Markets are risky; use risk management and testing.

5) Can I filter the Moonshots list?

Yes—pass parameters like min_grade, signal, and limit (as supported) to tailor to your audience and keep pages fast.

6) Do you provide SDKs or examples?

REST works with JavaScript and Python snippets above. Docs include quickstarts, Postman collections, and templates—start with Run Hello-TM.

7) Pricing, limits, and enterprise SLAs?

Begin free and scale up. See API plans for rate limits and enterprise options.

Research

Support and Resistance API: Auto-Calculate Smart Levels for Better Trades

Token Metrics Team
4

Most traders still draw lines by hand in TradingView. The support and resistance API from Token Metrics auto-calculates clean support and resistance levels from one request, so your dashboard, bot, or alerts can react instantly. In minutes, you’ll call /v2/resistance-support, render actionable levels for any token, and wire them into stops, targets, or notifications. Start by grabbing your key on Get API Key, then Run Hello-TM and Clone a Template to ship a production-ready feature fast.

What You’ll Build in 2 Minutes

A minimal script that fetches Support/Resistance via /v2/resistance-support for a symbol (e.g., BTC, SOL).

  • A one-liner curl to smoke-test your key.
  • A UI pattern to display nearest support, nearest resistance, level strength, and last updated time.

Next Endpoints to add

  • /v2/trading-signals (entries/exits)
  • /v2/hourly-trading-signals (intraday updates)
  • /v2/tm-grade (single-score context)
  • /v2/quantmetrics (risk/return framing)

Why This Matters

Precision beats guesswork. Hand-drawn lines are subjective and slow. The support and resistance API standardizes levels across assets and timeframes, enabling deterministic stops and take-profits your users (and bots) can trust.

Production-ready by design. A simple REST shape, predictable latency, and clear semantics let you add levels to token pages, automate SL/TP alerts, and build rule-based execution with minimal glue code.

Where to Find

Need the Support and Resistance data? The cURL request for it is in the top right of the API Reference for quick access.

👉 Keep momentum: Get API Key • Run Hello-TM • Clone a Template

How It Works (Under the Hood)

The Support/Resistance endpoint analyzes recent price structure to produce discrete levels above and below current price, along with strength indicators you can use for priority and styling. Query /v2/resistance-support?symbol=<ASSET>&timeframe=<HORIZON> to receive arrays of level objects and timestamps.

Polling vs webhooks. For dashboards, short-TTL caching and batched fetches keep pages snappy. For bots and alerts, use queued jobs or webhooks (where applicable) to avoid noisy, bursty polling—especially around market opens and major events.

Production Checklist

  • Rate limits: Respect plan caps; add client-side throttling.
  • Retries/backoff: Exponential backoff with jitter for 429/5xx; log failures.
  • Idempotency: Make alerting and order logic idempotent to prevent duplicates.
  • Caching: Memory/Redis/KV with short TTLs; pre-warm top symbols.
  • Batching: Fetch multiple assets per cycle; parallelize within rate limits.
  • Threshold logic: Add %-of-price buffers (e.g., alert at 0.3–0.5% from level).
  • Error catalog: Map common 4xx/5xx to actionable user guidance; keep request IDs.
  • Observability: Track p95/p99; measure alert precision (touch vs approach).
  • Security: Store API keys in a secrets manager; rotate regularly.

Use Cases & Patterns

  • Bot Builder (Headless): Use nearest support for stop placement and nearest resistance for profit targets. Combine with /v2/trading-signals for entries/exits and size via Quantmetrics (volatility, drawdown).
  • Dashboard Builder (Product): Add a Levels widget to token pages; badge strength (e.g., High/Med/Low) and show last touch time. Color the price region (below support, between levels, above resistance) for instant context.
  • Screener Maker (Lightweight Tools): “Close to level” sort: highlight tokens within X% of a strong level. Toggle alerts for approach vs breakout events.
  • Risk Management: Create policy rules like “no new long if price is within 0.2% of strong resistance.” Export daily level snapshots for audit/compliance.

Next Steps

  • Get API Key — generate a key and start free.
  • Run Hello-TM — verify your first successful call.
  • Clone a Template — deploy a levels panel or alerts bot today.
  • Watch the demo: Compare plans: Scale confidently with API plans.

FAQs

1) What does the Support & Resistance API return?

A JSON payload with arrays of support and resistance levels for a symbol (and optional timeframe), each with a price and strength indicator, plus an update timestamp.

2) How timely are the levels? What are the latency/SLOs?

The endpoint targets predictable latency suitable for dashboards and alerts. Use short-TTL caching for UIs, and queued jobs or webhooks for alerting to smooth traffic.

3) How do I trigger alerts or trades from levels?

Common patterns: alert when price is within X% of a level, touches a level, or breaks beyond with confirmation. Always make downstream actions idempotent and respect rate limits.

4) Can I combine levels with other endpoints?

Yes—pair with /v2/trading-signals for timing, /v2/tm-grade for quality context, and /v2/quantmetrics for risk sizing. This yields a complete decide-plan-execute loop.

5) Which timeframe should I use?

Intraday bots prefer shorter horizons; swing/position dashboards use daily or higher-timeframe levels. Offer a timeframe toggle and cache results per setting.

6) Do you provide SDKs or examples?

Use the REST snippets above (JS/Python). The docs include quickstarts, Postman collections, and templates—start with Run Hello-TM.

7) Pricing, limits, and enterprise SLAs?

Begin free and scale as you grow. See API plans for rate limits and enterprise SLA options.

Disclaimer

This content is for educational purposes only and does not constitute financial advice. Always conduct your own research before making any trading decisions.

Research

Quantmetrics API: Measure Risk & Reward in One Call

Token Metrics Team
5

Most traders see price—quants see probabilities. The Quantmetrics API turns raw performance into risk-adjusted stats like Sharpe, Sortino, volatility, drawdown, and CAGR so you can compare tokens objectively and build smarter bots and dashboards. In minutes, you’ll query /v2/quantmetrics, render a clear performance snapshot, and ship a feature that customers trust. Start by grabbing your key at Get API Key, Run Hello-TM to verify your first call, then Clone a Template to go live fast.

What You’ll Build in 2 Minutes

  • A minimal script that fetches Quantmetrics for a token via /v2/quantmetrics (e.g., BTC, ETH, SOL).
  • A smoke-test curl you can paste into your terminal.
  • A UI pattern that displays Sharpe, Sortino, volatility, max drawdown, CAGR, and lookback window.

Next Endpoints to Add

  • /v2/tm-grade (one-score signal)
  • /v2/trading-signals
  • /v2/hourly-trading-signals (timing)
  • /v2/resistance-support (risk placement)
  • /v2/price-prediction (scenario planning)

Why This Matters

Risk-adjusted truth beats hype. Price alone hides tail risk and whipsaws. Quantmetrics compresses edge, risk, and consistency into metrics that travel across assets and timeframes—so you can rank universes, size positions, and communicate performance like a professional.

Built for dev speed

A clean REST schema, predictable latency, and easy auth mean you can plug Sharpe/Sortino into bots, dashboards, and screeners without maintaining your own analytics pipeline. Pair with caching and batching to serve fast pages at scale.

Where to Find

The Quant Metrics cURL request is located in the top right of the API Reference, allowing you to easily integrate it with your application.

Build Smarter Crypto Apps & AI Agents with Token Metrics

Token Metrics provides real-time prices, trading signals, and on-chain insights all from one powerful API. Grab a Free API Key

How It Works (Under the Hood)

Quantmetrics computes risk-adjusted performance over a chosen lookback (e.g., 30d, 90d, 1y). You’ll receive a JSON snapshot with core statistics:

  • Sharpe ratio: excess return per unit of total volatility.
  • Sortino ratio: penalizes downside volatility more than upside.
  • Volatility: standard deviation of returns over the window.
  • Max drawdown: worst peak-to-trough decline.
  • CAGR / performance snapshot: geometric growth rate and best/worst periods.

Call /v2/quantmetrics?symbol=<ASSET>&window=<LOOKBACK> to fetch the current snapshot. For dashboards spanning many tokens, batch symbols and apply short-TTL caching. If you generate alerts (e.g., “Sharpe crossed 1.5”), run a scheduled job and queue notifications to avoid bursty polling.

Production Checklist

  • Rate limits: Understand your tier caps; add client-side throttling and queues.
  • Retries & backoff: Exponential backoff with jitter; treat 429/5xx as transient.
  • Idempotency: Prevent duplicate downstream actions on retried jobs.
  • Caching: Memory/Redis/KV with short TTLs; pre-warm popular symbols and windows.
  • Batching: Fetch multiple symbols per cycle; parallelize carefully within limits.
  • Error catalog: Map 4xx/5xx to clear remediation; log request IDs for tracing.
  • Observability: Track p95/p99 latency and error rates; alert on drift.
  • Security: Store API keys in secrets managers; rotate regularly.

Use Cases & Patterns

  • Bot Builder (Headless): Gate entries by Sharpe ≥ threshold and drawdown ≤ limit, then trigger with /v2/trading-signals; size by inverse volatility.
  • Dashboard Builder (Product): Add a Quantmetrics panel to token pages; allow switching lookbacks (30d/90d/1y) and export CSV.
  • Screener Maker (Lightweight Tools): Top-N by Sortino with filters for volatility and sector; add alert toggles when thresholds cross.
  • Allocator/PM Tools: Blend CAGR, Sharpe, drawdown into a composite score to rank reallocations; show methodology for trust.
  • Research/Reporting: Weekly digest of tokens with Sharpe ↑, drawdown ↓, and volatility ↓.

Next Steps

  • Get API Key — start free and generate a key in seconds.
  • Run Hello-TM — verify your first successful call.
  • Clone a Template — deploy a screener or dashboard today.
  • Watch the demo: VIDEO_URL_HERE
  • Compare plans: Scale with API plans.

FAQs

1) What does the Quantmetrics API return?

A JSON snapshot of risk-adjusted metrics (e.g., Sharpe, Sortino, volatility, max drawdown, CAGR) for a symbol and lookback window—ideal for ranking, sizing, and dashboards.

2) How fresh are the stats? What about latency/SLOs?

Responses are engineered for predictable latency. For heavy UI usage, add short-TTL caching and batch requests; for alerts, use scheduled jobs or webhooks where available.

3) Can I use Quantmetrics to size positions in a live bot?

Yes—many quants size inversely to volatility or require Sharpe ≥ X to trade. Always backtest and paper-trade before going live; past results are illustrative, not guarantees.

4) Which lookback window should I choose?

Short windows (30–90d) adapt faster but are noisier; longer windows (6–12m) are steadier but slower to react. Offer users a toggle and cache each window.

5) Do you provide SDKs or examples?

REST is straightforward (JS/Python above). Docs include quickstarts, Postman collections, and templates—start with Run Hello-TM.

6) Polling vs webhooks for quant alerts?

Dashboards usually use cached polling. For threshold alerts (e.g., Sharpe crosses 1.0), run scheduled jobs and queue notifications to keep usage smooth and idempotent.

7) Pricing, limits, and enterprise SLAs?

Begin free and scale up. See API plans for rate limits and enterprise SLA options.

Disclaimer

All information provided in this blog is for educational purposes only. It is not intended as financial advice. Users should perform their own research and consult with licensed professionals before making any investment or trading decisions.

Choose from Platinum, Gold, and Silver packages
Reach with 25–30% open rates and 0.5–1% CTR
Craft your own custom ad—from banners to tailored copy
Perfect for Crypto Exchanges, SaaS Tools, DeFi, and AI Products