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Yield farming is highly risky, but the core idea of incentivizing specific behavior is *insanely* powerful.

Let's look past the Yams, Sushi, Kimchi, Spaghetti ... and let's see yield farming for what it is:

Permissionless incentive distribution
1/ Today, any project can issue its own token, and immediately imbue it with perceived market value by listing it on Uniswap and enabling price discovery from day 1.

This enables projects to incentivize any type of user behavior it wants.
2/ It began with simple user incentives.

@synthetix_io rewarded users who mint synthetic assets with $SNX tokens, leading to explosive growth in 2019.

@compoundfinance rewarded lenders and borrowers with $COMP, leading to a 6x growth in collateral!
3/ Then, we started seeing cross-protocol incentives...

@synthetix_io & @renprotocol wanted liquidity for their synthetic BTC (sBTC & renBTC).

So they rewarded liquidity providers on @CurveFinance's synthetic BTC pool with $SNX & $REN tokens.

As a result, renBTC:
4/ Lately, we begin to see adversarial incentives...

@SushiSwap is rewarding Uniswap liquidity providers who stake their pools on Sushi with $SUSHI tokens. The plan is to migrate this liquidity in ~a week from Uniswap to Sushiswap.

Within a few days, Sushiu attracted $1.25B+
5/ One thing I'd love to see is projects dedicating part of their token incentives to insurance underwriters on @NexusMutual.

A few forward thinking projects are exploring this, and I believe they will take significant market share by offering safer experiences for users.
fin/ Permissionless incentive distribution is obvious to Layer 1s (e.g. how do we split rewards between validators, stakers, fishermen etc.?)

We're now seeing more complex incentive designs up the stack - a departure from 2017's "let's mint a random coin & throw it on Binance"
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