Here’s how it works: let’s say you have 100 bucks worth of a certain type of crypto called “ETH” (short for Ethereum, which is like the internet but for money). You could just hold onto that ETH and hope its value goes up over time. Or you could put it into a yield farming pool where other people are also putting their own ETH to earn rewards in another type of crypto called “COMP” (short for Compound, which is like a bank but for cryptocurrency).

The idea behind yield farming is that by lending out your ETH and earning COMP as interest, you can make even more money than just holding onto it. And the best part? You don’t have to do anything except set up an account on a decentralized finance (or “DeFi”) platform like Compound or Uniswap, which is basically like a website but for cryptocurrency trading and lending.

So let’s say you put your 100 ETH into the COMP pool on Compound. The first thing that happens is that you earn some interest (let’s say 5% per year) just by having your money in there. But then, other people start depositing their own ETH and borrowing it out to earn even more rewards in another type of crypto called “DAI” (short for Dai, which is like a stablecoin but for cryptocurrency).

The more people who deposit their ETH into the pool, the higher the interest rate goes up. And since you’re already earning 5% per year just by having your money in there, that means you could potentially earn even more rewards if other people start borrowing out your ETH and paying you back with interest!

Of course, this all sounds too good to be true (and it kind of is). Yield farming can be incredibly risky because the value of cryptocurrency is highly volatile and can fluctuate wildly from day to day. And if you don’t know what you’re doing, you could easily lose all your money by putting it into a pool with high interest rates but low liquidity (which means that there aren’t enough people borrowing out the ETH to cover everyone who wants to deposit their own).

But for those of us who are brave (or foolish) enough to try our luck at yield farming, the potential rewards can be enormous. And with a little bit of research and due diligence, you could potentially earn more money in a few months than most people make in an entire year!