What Is Yield Farming
Yield farming lets you earn rewards by staking liquidity pool tokens. Learn how farming works on DibDex, including LP tokens, staking, harvesting, APY, and TVL.
🌾 Overview
Yield farming (or liquidity farming) is a way to earn token rewards by providing liquidity to a token's trading pool. When you add liquidity to a trading pair on the decentralized exchange, you receive LP tokens that represent your share of the pool. You can then stake those LP tokens in a farm to earn additional token rewards over time.
On DibDex, farming is built into the token ecosystem from creation — not bolted on after the fact. Token creators allocate a percentage of their total supply as farming rewards during the token creation process, and the farm activates automatically after TGE. Because the farm allocation is locked into the smart contract at deployment, participants can verify the exact reward pool and duration before committing any funds. This is a key differentiator from platforms where farming programs can be changed, reduced, or cancelled at the creator's discretion.
🔒 Transparent by Design — Farm reward allocations are locked into the smart contract at deployment. Unlike other platforms, creators cannot change, reduce, or cancel farming programs after the fact.
🔑 Key Concepts
💧 Liquidity Pool (LP)
A liquidity pool is a smart contract that holds a pair of tokens (e.g., your token + ETH). It powers the decentralized exchange by allowing anyone to trade between the two tokens. The price is determined by the ratio of tokens in the pool.
🪙 LP Tokens
When you add tokens to a liquidity pool, you receive LP tokens in return. These tokens represent your proportional share of the pool. If you own 10% of all LP tokens for a pool, you own 10% of the liquidity in that pool.
LP tokens can be:
- Held in your wallet (you continue earning trading fees)
- Staked in a farm (you earn farming rewards on top of trading fees)
- Redeemed to withdraw your liquidity from the pool
📥 Staking
Staking means depositing your LP tokens into a farm contract. While staked, you earn farming rewards proportional to your share of the total staked amount. You can withdraw (unstake) your LP tokens at any time.
🌿 Harvesting
Harvesting is the act of claiming your accumulated farming rewards. Rewards accrue continuously — every second you have LP tokens staked, you earn a fraction of the reward pool. You can harvest at any time; there is no minimum waiting period.
💡 No Lock-Ups — You can harvest your rewards and unstake your LP tokens at any time. There are no minimum waiting periods or lock-up restrictions.
📊 APY (Annual Percentage Yield)
APY is the estimated annual yield on your staked LP tokens, expressed as a percentage. It accounts for daily compounding. A farm with 100% APY would theoretically double your staked value over one year if conditions remained constant — this is a mathematical illustration, not a guarantee.
APY fluctuates based on:
- The total amount staked in the farm (more stakers = lower individual APY)
- The token's price
- The farm's reward emission rate
📈 TVL (Total Value Locked)
TVL is the total USD value of all LP tokens currently staked in a farm. It indicates the overall level of participation. Higher TVL generally means more confidence in the token but also means rewards are split among more participants.
⚙️ How Farming Works on DibDex
- Creator configures farm — During token creation, the creator allocates a percentage of total supply as farming rewards and sets the farming duration
- TGE occurs — After the Token Generation Event, the farm is funded and activated
- Users provide liquidity — Users add tokens + native currency to the liquidity pool, receiving LP tokens
- Users stake LP tokens — LP tokens are deposited into the farm contract
- Rewards accrue — Every second, a portion of the reward pool is distributed proportionally to all stakers
- Users harvest — At any time, users can claim accumulated rewards to their wallet
- Users unstake — LP tokens can be withdrawn from the farm at any time
🚀 Quick Start — Provide liquidity, stake your LP tokens, and start earning rewards immediately. Harvest and unstake whenever you want.
📑 Page Tabs
The Farms page has three tabs:
- All Farms — Browse all live and upcoming farms
- Deposits & Rewards — Manage your staked positions and claim rewards
- Your Farms — For token creators: monitor your farm's performance
⚠️ Risks
- Smart contract risk — Funds are held in smart contracts, which carry inherent risk
- Impermanent loss — If the token price changes significantly relative to when you added liquidity, you may have less value than if you had simply held the tokens
- Token price risk — Farming rewards are paid in the token, whose price can fluctuate
⚠️ Understand Before You Farm — Yield farming involves smart contract risk, impermanent loss, and token price volatility. Make sure you understand these risks before committing funds.