I noticed that many people in the crypto community get confused about farming terminology. Let’s break down what’s actually happening in DeFi and why it might be interesting.

In the simplest terms, farming is when you put your crypto assets into a protocol like Venus, Aave, or Lido and earn interest for it. Like, you deposit ETH, sit back, and wait for the income to build up in the form of tokens or ETH itself. No complications.

But there’s an even more advanced approach—looping. It’s a strategy where you take out a loan against an already provided asset and then redeploy it into the protocol. Sounds strange? Here’s how it works: you provide ETH, then you borrow a portion of that same ETH (say, 50%), redeploy it again, and repeat the cycle several times. The result is that your total amount in the protocol grows, and the interest you earn also becomes higher.

But here’s the catch. Looping isn’t just a way to increase your income—it’s also a way to increase risk. When the price of ETH drops (by the way, it’s currently trading at around 2.32K, with minus 3.54% over the day), your position could approach the liquidation threshold. If that happens, the system will simply sell your assets at a forced rate. That’s why experienced farmers keep their loan-to-value (LTV) at no more than 50%.

For those who are just starting out, I’d give this advice: forget about looping for now—it’s complicated. First, get comfortable with basic farming. Choose a proven protocol—Venus on BSC, Aave on Ethereum or Polygon, Lido for staking ETH, and Marinade for SOL. These platforms have already been audited and have a solid reputation.

Start small. For example, set aside 10–50 thousand rubles per week for ETH, or the same amount for SOL (SOL is currently trading at around 88.99 with minus 0.48% for the day). Just provide assets without taking loans. The goal is to learn how to read interest rates, understand the mechanics of the protocol, and see how your capital grows. No liquidation risk.

Check your results every month. How many percent did you earn? Is it worth keeping your funds in the protocol rather than just holding crypto in your wallet? Could it be more profitable to simply keep it?

Once you’ve gotten used to basic farming and understand how interest rates work, then you can gradually move on to looping—this is a more complex technique that requires experience and constant monitoring. But there’s no need to rush.

Farming really is a great way to earn passive income on your assets. Just remember: start with reliable protocols, start small, and don’t chase maximum percentages on day one. Patience and consistency are your best friends in this game.