What is yield farming?

What is yield farming? It's the practice of moving crypto between lending pools and liquidity pools to earn the highest possible return, usually paid in interest or extra tokens. It matters because it turns idle crypto into an active income strategy, but the returns come with real risks like smart contract bugs, impermanent loss, and tokens that lose value fast. A common setup: you deposit USDC and ETH into a decentralized exchange like Uniswap, earn trading fees plus a governance token reward, then move funds to whichever pool pays more once that reward rate drops. Advertised annual yields can look huge, sometimes over 50%, but they often shrink quickly as more people pile in, and a chunk of the "yield" may just be a token's price falling.