Yield Farming is a protocol that offers high rewards to those that offer their cryptocurrencies for a period. With the high level of APY linked to this investment activity, it comes with risks not to be ignored when making a decision. Before any person decides to invest in a yield farming program, it is crucial to consider some elements. The user should possess a high-risk tolerance before getting involved.
With the benefits attached to a yield farming program, it is vital to note that some scams are designed to fleece people. Below are some yield farm scams that are common in this space.
- Research into the program
Before the user invests their crypto assets in the platform, they should research it. How genuine is it? Is it already working?
- Who is the program linked to?
The user should check if the program is linked to a reputable project. Some decentralized finance platforms launch their specific yield farming programs as one of the products they offer.
- Development team
It is crucial to check the development team of the yield farm to see their level of experience, record, and pedigree. If the development team is hidden, it is a red flag that should be checked. Please find out more about them before getting involved. Developers with existing and successful innovations are likely to create new platforms that will stand the test of time.
- Rate of return
Yield Farming projects that offer a ridiculously high-return percentage are a red flag. If the level of returns crosses at least 45%, then it may be shady. High returns are not easy to maintain, and if new investments don’t come in, it could be disastrous. They act as Ponzi schemes.