⛏️How Yield Farms Work

CakeDaoSwapYield Farms are designed to primarily incentivize users to provide liquidity for their favorite DeFi projects. Users who create and stake their liquidity provider tokens in a Yield Farm will earn CDAO utility tokens, or partner tokens from another project.

As a DeFi platform, liquidity is crucial to a healthy Core ecosystem. More liquidity available to CakeDaoSwapp means more users can trade hundreds of their favorite tokens at low fees. Therefore, it’s in everyone's best interest to encourage liquidity for popular trading pairs on CakeDaoSwap, because popular trading pairs require more liquidity and generate more trading fee revenue.

Farm Multipliers

CakeDaoSwap constantly monitors the liquidity available on the DEX to ensure that Yield Farms are incentivizing healthy levels of liquidity for particular tokens pairs. In practice, these incentives are managed through biweekly changes to the multipliers applied to each farm.

Farm multipliers are used to manage CDAO emissions distributed to Yield Farms on a per-block basis. Adjusting the multiplier for each Yield Farm changes the amount of CDAO rewards paid out to users who stake in that Yield Farm, relative to other CakeDaoSwap Yield Farms.

For example: Assuming all other factors like pool size, number of participants, and token price remained the same, a Yield Farm with a 2x multiplier would pay more in CDAO rewards than one with a 1x multiplier.

LP tokens that are staked in Yield Farms still earn their portion of the applicable trading fees, even while they are also earning CDAO in the Yield Farm. This allows users to earn both trading fee rewards (paid in the form additional LP tokens) and CDAO (paid as Yield Farm rewards) on their LP tokens.

To contribute to the longevity of the CakeDaoSwap ecosystem and earn even more rewards, users can stake the CDAO earned from Yield Farms into the CDAO-CDAO Staking Pool to earn even more CDAO.