Staking vs Yield Farming: What’s the best way to earn passive income from cryptocurrencies?

Yield Farming delivers more returns for crypto investors but is it riskier than staking? Find outCourtesy: Austin Distel, UnsplashAs the cryptocurrency space keeps evolving, blockchain developers keep finding newer ways to enable investors to earn passive income from their existing crypto investments.The buzz around yield farming began in 2020 alongside staking, and it continues to thrive in the DeFi space. Prior to these opportunities, Proof of Work (PoW) mining was the means for users to earn cryptocurrencies.If we compare staking to yield farming, it is undoubtedly more profitable to provide liquidity to Decentralized Exchanges (DEX) — the reason why more investors are eager to know more about yield farming.But is yield farming riskier than staking your crypto? Let us understand these concepts to know about the risks involved.At a basic level, Yield Farming means lending crypto assets to DeFi platforms to earn fixed or variable interest.DEXs are the backbone of the DeFi market, and to facilitate trades, they rely on investors willing to provide liquidity in exchange for a portion of the platform’s fees. It involves locking up your funds in a liquidity pool, which are smart contracts that contain funds.The farmers have the option to lend their assets for as long as a year or as short as they want and earn fees on a daily basis. The math is simple, the more he lends, the higher the rewards he earns.Read: Why Are More Countries Adopting Bitcoin As Legal Tender?The yield rates are competitive and keep changing and are the main reason why liquidity providers keep switching between platforms offering competitive Annual Percentage Yield (APY). As users keep switching platforms, they end up paying gas fees every time they leave or enter a liquidity pool.Liquidity providers need to pay gas fees every time they leave or enter a liquidity…