Yield Farming Resurgence Fuels DeFi Boom with 70% Crypto Yields

Key Points:

• Yield farming is making a comeback in the DeFi space, with platforms like GMX and Binance offering double-digit incentives to attract users.
• The yield farming resurgence is fueled by a confluence of factors, including the recent crypto market upswing and the escalating demand for leverage among traders.
• Despite the recent collapse of Terra, exchanges are still offering substantial rewards for yield farming participants

In the fast-paced world of cryptocurrency, the yield farming resurgence is once again gaining attention for its high returns. Platforms like GMX and Binance are enticing users with double-digit incentives, reigniting interest after a period of stagnation.

Yield Farming Resurgence Reactivates DeFi with Double-Digit Returns

Yield farming, a cornerstone of the decentralized finance (DeFi) movement, promises significant returns through lending crypto for interest and fees. Despite the recent collapse of Terra, exchanges are once again offering substantial rewards. The DeFi market, which reached $179 billion in November 2021, now stands at approximately $44.1 billion after the FTX exchange-triggered exodus.

GMX, a DeFi derivatives exchange, recently initiated an incentives program with Arbitrum DAO, offering users annual yields of up to 70%. This program involves trading, providing liquidity, and engaging in various activities on GMX’s platform. The surge in demand is also reflected in borrowing rates for stablecoins, such as USDC and Tether, exceeding 10% on platforms like Aave.

DeFi’s Yield Farming Resurgence: High Yields, Leverage, and Animal Spirits

Keone Hon, CEO of Monad Labs, explains the fundamental connection between leverage demand and the yield farming resurgence. Traders deposit risk assets into lending protocols and borrow dollars against those assets, fueling the yield farming phenomenon. Once popular, yield farming lost momentum amid market fluctuations and rising traditional interest rates. However, the latest crypto market upswing has reignited interest in platforms like GMX.

In addition to DeFi, major exchange Binance offers a “bonus” yield program, providing users with up to 13% annual yields for parking their USDT stablecoins. Projects are leveraging these programs to gather momentum as the industry experiences a resurgence in “animal spirits,” says Keone Hon at Monad Labs.

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