Yield farming is a practice in decentralized finance (DeFi) where individuals lock up their digital assets in smart contracts to earn rewards. It involves providing liquidity to decentralized platforms, such as liquidity pools or lending protocols, in exchange for earning additional tokens.

Yield farming enables users to make productive use of their idle assets and generate passive income by earning interest or receiving token rewards. Participants typically deposit their digital assets into a specific DeFi protocol and receive tokens representing their share of the pool. These tokens can then be staked or used in other DeFi activities to generate further rewards.

The rewards in yield farming can vary depending on the platform and the specific tokens involved. Rewards in yield farming can vary from transaction fees, and newly created tokens to a share of the platform's earnings. While the potential returns from yield farming can be desirable, it is crucial to acknowledge the accompanying risks, including impermanent loss and vulnerabilities in smart contracts.