Yield Farming vs. Crypto Mining

Crypto mining is based on a consensus algorithm called Proof of Work, while yield farming relies on the decentralized ecosystem of “money legos” built on Ethereum. Compared to crypto mining, yield farming is an innovative way to earn rewards with cryptocurrency holdings using permissionless liquidity protocols.

While both yield farming and crypto mining involve mining pools, liquidity providers are the prominent elements that differentiate yield farming from crypto mining.

Beyond the shared, decentralized peer-to-peer network, what further differentiates yield farming is its resemblance to the borrowing and lending plan involving governance tokens to yield rewards. On the contrary, crypto mining aids the introduction of new coins into the existing supply by block mining a block is to hash each transaction taken from the memory pool individually.

Ultimately, yield farmers and crypto miners shared the same goal to earn incentives by deploying unique strategies to maximize yields.