Yield farming vs hodl

General Chat Yield Farming Inception
1

I am wondering what is the real advantage of yield farming instead of holding.

Holding the token has a lot more upside. Yield farming has disadvantage of impermanent loss lots of times. I can see that yield farming is good for market going side way, or you are holding stable coin. If the coin price drops dramatically, the position will be liquidated by the bot to prevent loss?

Specially now, there are no more 10x yield farming return due to price drop of governance tokens, yield farming is less attractive.

Anyone disagree? Why?

2

Most of the vault strategies don’t incur IL, but that isn’t to say they are as risk-free as just holding coins. It is up to the user to determine their risk level. People use vaults as it can let them increase their holdings by up to 20 or 30% APY, at times, though yields have been dropping recently.

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