The DEX volume has surpassed its all-time high as yield farming trend continues to gain popularity.
As Forbes reported, DeFi yield farming has become the latest trend in cryptocurrency trading. According to the report, yield farming is the “act of leveraging” decentralized finance (DeFi) protocols and solutions to generate high rates of return.
DEX Volume sets new all-time high
According to Dune Analytics, a website that collects Ethereum data, the decentralized exchange or DEX volume broke its all-time high last week. DEX volume soared to $503 million worth of traded assets.
The majority of the trade volume was hosted by Curve Finance and Uniswap that supported the trading of $211 million and $135 million respectively. The rapid increase in DEX volume can be attributed to the rise of yield farming.
Yield farming allows investors to earn up to 100 percent annual interest of their USD investments. Furthermore, bonuses and incentives can cause the revenue to rise even higher than 100 percent.
How does it work?
As explained by Tony Sheng on Twitter, yield farming can be done by lending your money to other people. While traditional banks offer interest rates close to one percent DeFi is offering at least a hundred times higher.
Borrowers across DeFi are incentivized to borrow money and pay a higher rate than traditional investors. This is because they believe that they can much more than they have borrowed.
You can lend your money at platforms such as Compound Finance to gain revenue and earn bonus cash back on the interests you earn. To increase your profits, you can use your money to borrow more money and lend that sum to the platform.