Yield Farming for Beginners: How to Get Started and Avoid Common Mistakes

When it comes to making money in DeFi, yield farming is probably one of the most common suggestions from veterans. While it comes with a high degree of risk, the premiums are so juicy that many investors still prefer them to many other options available to DeFi users. It is still a novel concept to many contemporary capital holders, so learning about its pitfalls and limitations is hugely important.

Yield farming for beginners is a relatively difficult strategy to execute. While it may look easy on paper, the onboarding process alone can be painful and discouraging. Close to 24% of all surveyed investors by RIF said that onboarding is the biggest issue, with only the lack of adoption cited as a bigger problem.

Let’s talk about different forms of yields in the decentralized finance sector and explore various ways to mitigate risks in yield farming.

What is it, and how do you cook it?

Yield farming is a strategy where a capital holder allocates funds to a pool in exchange for rewards like native utility tokens, governance tokens, or digital assets issued by partnered protocols. Since such pools are usually offered by unproven protocols, they often come with higher premiums, with some projects having APYs in hundreds of percentile points.

Many time-tested protocols also have rewards. Some experts call pools offered by established DEXes yield farming. For instance, investors on Curve can put money into the MIM-3CRV pool for a measly 0.15% base APY but with a very appealing 9.35% reward APY.

How to start yield farming

Reading about sky-high APYs and incredible success stories can be inspiring. Many newcomers want to get started and make money by investing in promising DeFi protocols. However, they are often puzzled at the very beginning of their journeys as they do not know how to get into the decentralized finance sector in the first place.

Here’s a very brief step-by-step guide for complete newbies:

1. You need a good wallet. The DeFi ecosystem operates mostly in a pseudo-anonymous fashion, with many protocols adopting at least some form of AML or KYC. All protocols require users to log in using their wallets. The choice usually depends on a variety of factors, including the main network you plan to work with. Metamask is a good choice for Ethereum. You can also try the Rivo wallet, which allows you to interact with several protocols across multiple chains.
2. Choosing a yield farming platform. The next step is to find a good destination for capital allocation. One of the simplest ways is to use aggregators that offer detailed on-chain data. DeFiLlama, De.Fi, and some others immediately come to mind. A responsible investor must do their due diligence and research the platforms they find intriguing. Alternatively, you can simply go to Rivo’s yield marketplace and choose from a wide range of vetted strategies according to your preferences and risk tolerance.
3. Connect to the protocol you want to invest in. In most cases, you can simply use a browser extension like MetaMask or TrustWallet to interact effortlessly with the vast majority of EVM-based (Ethereum) projects. If you follow some basic internet security rules and keep your laptop clean from viruses and malware, you won’t have to care much about the safety of data and privacy. However, employing all the necessary means of protecting personal data and funds is imperative.

Many platforms offer unique ways to invest. Some pools are one-sided. For instance, many lending projects like Aave or Compound have single-asset pools that pay based on utilization. DEXes (decentralized exchanges) and AMMs (automatic market makers) have two-sided liquidity pools that enable corresponding swaps.

While it is possible to explain how these pools operate, it is much better to learn through practice. We recommend dedicating an insignificant portion of your portfolio to training. Go out there and try a wide range of different investment options. Having a separate wallet address for this particular purpose is a great idea, too!

The difference between yield farming and staking

A newcomer may wonder how these two particular approaches to DeFi investments differ. In both cases, you move funds to a pool and collect interest.

There are several distinct features that make yield farming different:

• You collect mostly rewards. While some pools may have a base APY, it is usually very small and does not recuperate investments. However, you take advantage of higher reward APYs. Pendle is a great example. Here, you can invest in the GHO-USR pool for a 1.43% base APY and receive 6.53% in PENDLE rewards. In March 2025, the pool overperformed by delivering 27.1% on average.
• Yield farming is riskier. Staking on mainnets has many benefits. For starters, you invest in a token that has a more or less stable market value and can significantly increase your capital through gains and appreciation. For instance, ETH staking yields roughly 4.1% annually, which can be translated into a higher ROI if you manage to sell ETH at a higher price than entry. On the other hand, you enjoy higher risk premiums when engaging in yield farming.
• It is also more flexible. You can engage in a wide range of investment activities while collecting rewards. It is also easier to move from one chain to another when seeking higher returns. Since the impact of cryptocurrency volatility on profitability can be dramatic, it is a common occurrence for investors to switch between protocols depending on where the grass is greener. When you stake ETH, you stake ETH and have to stick with the strategy.

Remembering these differences is important for the long-term success of your investment operations in the DeFi ecosystem. You should not consider yield farming a safe bet. Doing your own research is hugely important.

Common mistakes in yield farming

One of the issues for many newcomers is the foreign nature of the technology. Beginners who have spent most of their lives interacting with the tradfi economy may feel lost when trying to engage with DeFi protocols. They also forget about some things that are so common in tradfi (like consumer protection) that they completely ignore them.

Here are some mistakes that you should avoid:

• Always check the smart contract security. Over $2 billion was lost to various smart contract breaches in 2022 alone. Work with protocols that conduct security audits and have a time-tested infrastructure that offers safety and reliability.
• Regulations play a huge role. Europe, North America, and Asia already have strict rules and taxation policies regarding cryptocurrencies. Understanding how these rules work is crucial. In many countries, it is unclear how tax obligations can affect income from yield farming. You should always consult with a knowledgeable lawyer before proceeding.
• Trusting the community. While it is true that crypto enthusiasts form a very cohesive bunch that can be extremely supportive, many people are exploiting the trust between investors. Fake influencers, self-proclaimed gurus, and financial analysts without any credentials can lead you to dangerous waters. Do your own research! Do not overestimate the role of communities and forums in learning yield farming.
• Improper portfolio management. Many investors get excited about potential returns and chase the highest number instead of focusing on diversification and risk mitigation. The problem with the DeFi ecosystem is that there are way too many options. It is ridiculously easy for an investor to overfocus on a promising pool instead of spreading funds across multiple strategies. Asset management in DeFi is extremely important!

In 2025, focusing on yield farming can be quite profitable for many smart investors who can control their emotions. We have more than 550 different protocols focusing on yields. The combined TVL of these projects is over $11.5 billion. It is still one of the biggest categories in the DeFi ecosystem.

Make your yield farming strategy better

One must consider ethical aspects and the sustainability of yield farming when searching for the best option. Security, profitability, and reliability are also serious concerns for any investor. Doing your due diligence before allocating funds to a protocol is imperative.Rivo is an ideal solution for many DeFi users who want to invest in the best options out there. Rivo showcases a wide range of investment strategies that are vetted by a team of professionals who do your due diligence and allow you to focus on choosing the right option for your portfolio! Check out the yield marketplace now!