When most people think of cryptocurrency investments, they imagine standard trading. It's the same concept as trading traditional stock, buying low and selling high. While there are plenty of ways to expand your wealth through buying and selling virtual currency, it's not the only way to invest. Maximize your crypto earnings with US Yield Farming. Visit this website now and start growing your portfolio!
US yield farming is a compelling alternative that provides opportunities to maximize returns.
Yield Farming 101
Simply put, yield farming is about putting your assets to work. It's part of the larger decentralized finance (DeFi) market.
The term "DeFi" describes several crypto financial activities occurring on a peer-to-peer blockchain. It differs from standard centralized finance because it cuts out the intermediaries. Traditionally, money has to go through several high-cost intermediaries, making transaction costs higher than needed. DeFi bypasses several layers to make transactions faster, cheaper and more efficient.
Yield farming is one example of DeFi. When you yield farm, you deposit your assets into a DeFi protocol. Your assets then go to other DeFi platforms for use in other activities. The benefit of US yield farming is that you earn reward tokens. The tokens are akin to interest, allowing you to grow your assets after depositing initial capital.
You can also lend or stake your assets into a larger liquidity pool when you yield farm. Decentralized exchanges still need traditional liquidity. But instead of using market makers, decentralized exchanges use liquidity pools governed by smart contracts. When you become part of a liquidity pool, you become a liquidity provider (LP).
As an LP, you lock your assets into the liquidity pool, making it available for lending, borrowing and other financial activities. In return, you can earn substantial interest.
Managing Yield Farming Taxes
Yield farming is not like traditional trading. It's more complex and involves more transactions. However, similar tax rules apply. The IRS treats cryptocurrency as a capital asset. Therefore, you must pay capital gains tax; any interest you earn through yield farming is taxable.
Because yield farming is so complex, DeFi investors must utilize feature-rich crypto tax and portfolio software for easy reporting during tax season.
Read a similar article about software for crypto tax here at this page.
