What is Facebook Like-Farming Scam and who is a Like-Farmer?

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What is Like Farming? And how can it affect you as a writer or blogger? Learn more about this shady marketing technique and why you shouldnt encourage it

Those of us who write content online, via our own blogs or free-to-use sites here like Zujava, learn early on that theft and plagiarism can be a serious problem against which we must diligently protect ourselves. Unscrupulous bloggers and internet marketers may steal our content to post on their own sites, substituting our affiliate links for their own; others might steal our photographs, recipes, how-tos and other words and art for their own pages placed on other sites.

But there’s a new kind of content theft which many are not aware of yet, nor do they understand how it works and could be hurting our online reputation – and income. It’s taking place on Facebook and it’s called “Like Farming” – because it’s all about gathering “Likes” and “Shares” for a Facebook page in order to unscrupulously make money for the page owner. For a while most of these scams tried to play on our sympathy in various ways, but at the moment food bloggers and recipe writers seem to be major target for having their original photographs and recipes stolen by these online thieves. Who knows what kind of content they’ll target next!

If you haven’t heard about Like Farming before, read on as I’ll attempt to explain how it works, why it’s bad, and what you can do to protect yourself (and others) against this harmful scam.

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The risks of yield farming

Yield farming isn’t simple. The most profitable yield farming strategies are highly complex and only recommended for advanced users. In addition, yield farming is generally more suited to those that have a lot of capital to deploy (i.e., whales).

Yield farming isn’t as easy as it seems, and if you don’t understand what you’re doing, you’ll likely lose money. We’ve just discussed how your collateral can be liquidated. But what other risks do you need to be aware of?

One obvious risk of yield farming is smart contracts. Due to the nature of DeFi, many protocols are built and developed by small teams with limited budgets. This can increase the risk of smart contract bugs.Even in the case of bigger protocols that are audited by reputable auditing firms, vulnerabilities and bugs are discovered all the time. Due to the immutable nature of blockchain, this can lead to loss of user funds. You need to take this into account when locking your funds in a smart contract.

In addition, one of the biggest advantages of DeFi is also one of its greatest risks. It’s the idea of composability. Let’s see how it impacts yield farming.

As we’ve discussed before, DeFi protocols are permissionless and can seamlessly integrate with each other. This means that the entire DeFi ecosystem is heavily reliant on each of its building blocks. This is what we refer to when we say that these applications are composable – they can easily work together.

Why is this a risk? Well, if just one of the building blocks doesn’t work as intended, the whole ecosystem may suffer. This is what poses one of the greatest risks to yield farmers and liquidity pools. You not only have to trust the protocol you deposit your funds to but all the others it may be reliant upon.

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How are yield farming returns calculated?

Typically, the estimated yield farming returns are calculated annualized. This estimates the returns that you could expect over the course of a year.

Some commonly used metrics are Annual Percentage Rate (APR) and Annual Percentage Yield (APY). The difference between them is that APR doesn’t take into account the effect of compounding, while APY does. Compounding, in this case, means directly reinvesting profits to generate more returns. However, be aware that APR and APY may be used interchangeably.

It’s also worth keeping in mind that these are only estimations and projections. Even short-terms rewards are quite difficult to estimate accurately. Why? Yield farming is a highly competitive and fast-paced market, and the rewards can fluctuate rapidly. If a yield farming strategy works for a while, many farmers will jump on the opportunity, and it may stop yielding high returns. 

As APR and APY come from the legacy markets, DeFi may need to find its own metrics for calculating returns. Due to the fast pace of DeFi, weekly or even daily estimated returns may make more sense.

Yield Farming: Advantages

As a yield farmer, you might lend digital assets such as Dai through a DApp, such as Compound (COMP), which then lends coins to borrowers. Interest rates change depending on how high demand is. The interest earned accrues daily, and you get paid in new COMP coins, which can also appreciate in value. Compound (COMP) and Aave (AAVE) are a couple of the most popular DeFi protocols for yield farming which have helped popularize this section of the DeFi market.

Instead of just having your cryptocurrency stored in a wallet, you can effectively earn more crypto by yield farming. Yield farmers can earn from transaction fees, token rewards, interest, and price appreciation. Yield farming is also an inexpensive alternative to mining — since you don’t have to purchase expensive mining equipment or pay for electricity. 

More sophisticated yield farming strategies can be executed using smart contracts, or by depositing a few different tokens onto a crypto platform. A yield farming protocol typically focuses on maximizing returns, while at the same time taking liquidity and security into consideration.

Warnings

  • Becoming (and staying) a farmer is a major life decision that can have ramifications for the rest of your life. Take your time, do your research, and think hard before you make the decision to be a farmer.

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Yield Farming vs. Staking: Which Is the Better Long-Term Investment?

You can also use yield farming and staking as longer-term strategies to earn more income from crypto.

First, let’s take a look at yield farming, which is basically reinvesting profits back into crypto to generate interest in the form of more crypto. While yield farming may not always offer an immediate return on investment (ROI), it  doesn’t require you to lock up your money, as staking does. 

Despite the lack of an immediate payout, yield farming has the potential to be fairly lucrative over the long term. Why? Because without a lockup, you can try to jump between platforms and tokens to find the best yield. You just need to trust the network and DApp you’re using. As such, yield farming could prove to be a great way to diversify your portfolio.

Staking can be a reliable source of returns over the long term as well, especially if you’re committed to HODLing and therefore plan to keep your coins for the long haul. Whether you decide to stake or yield farm over time may depend more on how actively you’d like to manage your investments. While staking returns could turn out to be less profitable, it trumps the yield farming vs. staking comparison because the associated long-term risks are fewer. This ultimately makes the returns more stable.

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