Yield farming allows investors to generate yield by placing funds or tokens in a decentralized application (dApp). Crypto wallets, DEXs, decentralized social media platforms, and other apps are examples of dApps.
Decentralized exchanges (DEXs) are commonly used by yield farmers to lend, borrow, or stake coins in order to generate interest and speculate on price movements. DeFi enables yield farming by using smart contracts, which are pieces of code that automate financial agreements between two or more people.