Yield farming is perhaps by far the best hidden gem for earning (mostly) steady and lucrative rewards passively across the world of decentralized finance. While regular banks might net you just barely enough on your savings to scrape past the inflation rate, even with the higher returns on interest-bearing accounts, DeFi can reward you so much more. This then leads us to the question of how to yield farm on Polygon, one of the most rapidly expanding networks out there.
Of course, why wouldn't you want to learn how to do that, given how you can start earning tens, hundreds, thousands, or millions and more percentage returns every single year? Brick and mortar banks could only dream of such yields. While DeFi might seem like a convoluted and risky environment to be in for newcomers, the idea of yield farming is actually quite straightforward. With just a few simple steps, you too could start learning how to yield farm on Polygon right away.
The Best Yield Farms On Polygon – Top 5 Farms
Before we get into studying how to yield farm on Polygon, it's a good time to start discussing as to where are the best places in which you can farm for yields. There are naturally quite a few to choose from, based on a few different criteria. The first and foremost would naturally be the yields that you can get from those farms and looking at which ones offer the highest APYs (or APRs). There's also trying to pick and choose which farms you'd like based on the features that they offer.
You see, yield farms aren't a type of platform on their own. Farming for yields can be done from a variety of different types of DeFi protocols, such as market activity around AMMs and liquidity pools like those you'd find on decentralized exchanges (DEX) or lending and borrowing platforms, or perhaps even money market DeFi funds. Or, you might want to choose a dedicated yield farming optimizer, which hunts across every DeFi protocol to aggregate together the best yields for you.
Plus, these optimizers even add extra services on top, such as specialized auto-compounding and reinvesting functionality to maximize your earnings potential while also helping to lower costs in terms of gas fees. Another worthy consideration for yield farming would be picking which protocols offer the best security. Quite a few DeFi platforms – mostly built on the Binance Smart Chain – have been exploited recently. You should do your due diligence before locking up your funds with them.
|Protocol (BSC-Powered)||Type (Compatible With BTCB)||Lowest APY/APR (At the time of writing)||Highest APY/APR (At the time of writing)||Pages|
|AutoFarm||Yield Aggregator||BTCB-ETH LP (12.55%)||BTCB-bDIGG LP (72.93%)|
|Beefy.Finance||Yield Aggregator||renBTC-BTCB (3.16%)||KEBAB-BTCB LP (393.22%)|
|Polycat||DEX (Decentralized Exchange)||WETH = 10.09%||ETH-TITAN = 33,735.16%|
|Polywhale||Decentralized Exchange/Yield Farming Optimiser||USDT-USDC = 24.38%||KRILL-QUICK = 828.81%|
A Step-By-Step Guide On How To Yield Farm On Polygon
Yield farming, for those that don't know, is a process in which you basically lend out your crypto assets to other users. This can be done by locking them up in a wholly trust-less and decentralized way, such as pooling together your tokens into a liquidity pool. For decentralized exchanges, these pools are where users can swap tokens in and out from as liquidity. For lending and borrowing services, it's these pools that contribute collateral and assets for users to take out loans with.
In return, you – the person lending out and locking or pooling those assets – gets a portion of the fees and interest rates in return as a reward and incentive. These yields are often passively farmed, as users try to profit while also simultaneously helping their favorite DeFi platforms to grow. The next phase of our guide in teaching you how to yield farm on Polygon will show you step by step how to do this. Granted, we can't exactly hold all of your hands, as there are too many variables.
Which DeFi protocol are you using to farm for yields, and which wallet do you prefer to hold your tokens? Thankfully, a lot of these steps are familiar to one another, so our guide here will at least rhyme quite well, depending on your whims and preferences. In our how-to yield farm on Polygon guide, we'll be using the popular MetaMask wallet and the well-loved AutoFarm yield farming optimizers for our examples. You should be able to easily mirror these in your own endeavors.
Step 1: Install Your MetaMask Wallet
First thing's first, we'll need a wallet to store all those tokens in, even for just a brief moment, to transit your cryptocurrencies from one DeFi protocol to another. As we mentioned before, we'll be using MetaMask for this, thanks to its popularity and well-rounded set of features, as well as its refinement and reliability. However, there are many other wallet options, such as WalletConnect, Math Wallet, Trust Wallet, and more. Now, head over to the MetaMask webpage.
Then, go to the “Download” tab, and download the web-based MetaMask extension depending on which browser you use – Chrome, Firefox, Brave, or Edge. Next, make sure you're on the right MetaMask website, and download the right extension. Double-check this, as there have been scam wallets that try to steal your tokens by imitating MetaMask. Don't just click on the first one you see without hesitation. Now, install it, and a tiny orange fox should appear on your browser toolbar.
Step 1.5: Set Up Your MetaMask Wallet
Once you've clicked “Add Extension” for MetaMask, and have given it the all-clear, you can start by creating an account for MetaMask. Click on that orange fox icon, and then a small window will appear. You may have to agree to a few terms and conditions pages and then click a “Try It Now” button. One thing to note here is that your MetaMask account isn't bound to an email address. To get started with an account, all you need is a password. And be sure it's a very strong one.
Type in your password, click “Next,” and then click “Reveal Secret Words.” This is a 12-word seed phrase, and it's very important that you save this! It's a backup in case you need to restore your account or if you import it from one browser to another. Remember, there's no email address here. You can either save those 12-words as a file or copy it over to a safe place, like a password manager. Once that's done, you'll have to reconfirm your secret phrase by arranging them in order.
Step 2: Connect Your MetaMask Wallet To AutoFarm
Once you've confirmed that seed phrase and saved it safely, your MetaMask wallet is now ready. The next step in learning how to yield farm on Polygon would be to head over to AutoFarm and then click on “Connect Wallet” right up top. Since we're specifically yield farming on Polygon, be sure to click on the “Polygon” tab on the main “Vaults” page. Maybe some other day, we can learn to yield farm on BSC or HECO (HuobiEco). Now, you can pick and choose which Vault you'd like.
The best way is to filter the selection by either by TVL (total value locked – how much $ in tokens have been pooled together in this Vault) or by APY (annual percentage yield – the estimated yearly returns for that Vault). You can also see other stats on this page alone from the list, such as “Daily APR,” or your estimated and adjusted daily returns, or pAUTO APR, which is how much more you can earn daily when Auto-Farm's auto-compounding function kicks into reinvesting your returns.
Step 3: Pick A Polygon-Based Vault On AutoFarm That You'd Like
Now, pick and choose which Vaults you'd like to invest in. Once you've clicked them, you might see a warning message telling you that you've connected to the wrong network with your MetaMask wallet. Since MetaMask is a multichain wallet – read: compatible with many blockchains – you'll have to set it to switch to the Polygon network. Just click on “Switch To Polygon,” and then a small pop-up window should appear, where MetaMask asks you to confirm the network switching.
Once you've approved this, the particular AutoFarm Vault will show you a small window showing you your token balance in this Vault. While we're here, it's best to get acquainted with all the data you see on screen. There are things like your projected earnings, fees that you need to pay, the rough yields that you could earn in total, or how many auto-compounds will happen every year. This is important for you to compare between the Vaults and see which ones best suit your needs.
Step 4: Deposit The Required Asset Into The Farm
Now comes what is likely the trickiest bit in our how-to-yield farm on Polygon guide – buying and depositing the right tokens into the Vaults to start farming for yields. Each of those Vaults is reliant on different crypto tokens and is based on protocols outside of AutoFarm. To make things easier, just click on which Vault you'd aspire to invest into. When you see the words “xxx-yyy LP” in the Vault's name, it means you need liquidity provider (LP) tokens for those xxx-yyy pairs.
For example, this “WMATIC-PZAP LP” Vault based on PZAP means that in order for you to farm for yields, you'll need LP tokens earned from pooling together both WMATIC and PZAP tokens into a WMAZTIC-PZAP liquidity pool, which can be found on PolyZap Finance. Other Vaults, on the other hand, can be single token vaults, like needing you to deposit WETH (Wrapped ETH) or USDC. The easiest way to find the exact tokens you need is to click on a Vault on AutoFarm.
Once there, scroll down to “Vault Details” and look under “Asset.” Click on the asset name, such as the “WMATIC-PZAP LP” from before, which should take you to PolyZap Finance (where it's based), and onto the exact trading pair which you can earn LP tokens from. Next, you can click on “Add Liquidity” on the window to add both WMATIC and PZAP tokens, respectively, to be locked into a liquidity pool as a pair. From here, you'll start earning WMATIC-PZAP LP tokens.
Step 4.5: Find Those Base Tokens
But wait, before you can add WMATIC and PZAP tokens into the liquidity pool, you'll first need those WMATIC and PZAP tokens. Since we're already on PolyZap, we can start buying those two tokens here through the “Exchange” tab on the left-hand side. But… Before we can do this, you'll first need another token to trade from as base funds. As we're on Polygon, we'll be using their chain-native MATIC tokens as an example, which you can first buy from a centralized exchange.
Now, transfer those MATIC tokens to your MetaMask wallet address. Then, connect the MetaMask wallet to PolyZap. On the exchange side of PolyZap, click on the “Swap” tab, and choose MATIC as the base pair. You can then select a currency, being “WMATIC” and “PZAP,” in two separate trades. Therefore, be sure to divide the amount of MATIC base tokens you have in two. Simply input the amount, and the WMATIC and PZAP tokens should respectively appear on your MetaMask wallet.
You can check this by clicking the orange MetaMask logo. As you're doing this, there will be quite a few pop-up windows from MetaMask, prompting you to confirm that you're authorizing it and then notifying you of all those transactions. Once you already have WMATIC and PZAP tokens separately, it's time to pool them together as a pair into a liquidity pool. While you're still on the PolyZap “Exchange,” click on the “Liquidity” tab and then “Add Liquidity.”
Step 5: Earn LP Tokens, And Start Yield Farming On AutoFarm
After you've chosen to “Add Liquidity,” select the two token pairs that you'd want to pool into, matching the pair on AutoFarm. Next, deposit your maximum balance of WMATIC and PZAP tokens into the WMATIC-PZAP liquidity pool pair, and click on “Unlock Wallet,” which will begin the transaction. A few pop-ups and prompts later from MetaMask, and you've now earned LP tokens to represent the share of your amount that you've contributed into the WMATIC-PZAP liquidity pool.
Once you already have those LP tokens from PolyZap, you can very quickly and easily withdraw them back into your (connected) MetaMask wallet, with the value of all your tokens in that pool represented by them. Once you have that balance of LP tokens in your MetaMask, head back to that WMATIC-PZAP LP Vault on AutoFarm from earlier. All you have to do now is deposit all your balance of WMATIC-PZAP LP tokens by clicking on “Deposit” and then “Approve” to officially start yield farming.
Now, all you have to do is sit and wait for your assets to grow in return. If you're ready to stop farming for yields on the WMATIC-PZAP LP Vault, you can do so by clicking on “Withdraw” to remove your WMATIC-PZAP LP tokens from the Vault and back into your MetaMask wallet. After this, you can take profit by heading back to PolyZap, and doing everything in reverse. It starts by going to the “Exchange” and then “Liquidity” and select WMATIC and PZAP as the two pairs.
Then, you can see all your WMATIC-PZAP LP tokens, which you can sell in order to get back WMATIC and PZAP tokens as the base pair by essentially forgoing your share to earn back the collateral. After that, you can sell those now-separated WMATIC and PZAP tokens individually for something else. All you have to bear in mind are the fees. In all, yield farming does have its many, sometimes confusing, steps to get started. But once you get the hang of it, it's second nature.