This transcript was generated from the episode audio and may contain minor errors.
Hey, what's up? Welcome to Side Hustle School. This is your host, Chris Guillebeau. Now, there are new opportunities in the new economy. So many, in fact, that I'm starting to call it the new new economy, or maybe the new new new, but then we're just getting so meta.
But especially in response to all the stuff happening with NFTs and decentralized finance and markets in just about everything. Now, if you don't know how this works, it's okay, because nobody knows how it works, right? Everybody's just kind of pretending. But with that in mind, have you heard of yield farming? That's what we're talking about today, yield farming. I had never heard of this until recently. So if you're like, what is that? Well,
you're not alone. But it's super interesting. So a listener here is wondering how it works and how to profit from it. Yield farming, I've done some research, I went deep into the fields and drove a tractor. And as I said, it's pretty interesting. It's a wild world, a world of
volatility, of risk, and at least for some profit. Okay, so how does yield farming work? What in the world are we even talking about? That's what this episode is about. Hi, Chris, this is Sasha from Seattle, and I've been listening to the show for a couple of years.
I've heard that some cryptocurrencies are offering 60 to 80% annual interest, not including whatever growth they experience. The people who earn this interest are called yield farmers. And I never thought I'd want to be a farmer, but it sounds intriguing. Is there a good place to learn about how it works? I missed out on Bitcoin mining back in the day. And now I'm
keeping an eye out for opportunities. I need something that's easy and doesn't take a lot of money, which is why I listened to side hustle school. Looking forward to what you have to say about this. Thanks. Well, I have been dabbling in the world of digital currencies and blockchain for a while, partly just because I think it's interesting and I've been trying to understand it. I want to make sure that I am doing my best to stay current as much as possible. But I wasn't
really familiar with yield farming at all until I heard a podcast called Odd Lots, where the hosts interviewed a guy who does this. And so that went into a lot of detail, I don't know, maybe an hour long or even an hour and a half, some of which was over my head. But Sasha asked for a good place to learn how it works. So that's my first recommendation. Start with that. The podcast is called Odd Lots.
If you Google Odd Lots yield farming, it will take you to a direct link. But now for the quick takeaways. So if you don't want the hour and a half details, quick takeaways, which I do understand somewhat, the world of DeFi, which is decentralized finance, it includes a lot of people loaning money to each other and to institutions. And you also have more than a thousand new cryptocurrencies launching every day could actually be more than a thousand and just I have such a hard time getting my head around that. But a lot of new cryptocurrencies coming out every day. Of course, nothing much will
happen with most of them. It's not like there's 1000 new bitcoins coming out every day, you know, Bitcoin currencies. But to attract investors, these coins sometimes offer yields, which is just interest, okay, just like if you're going to deposit money in the bank, you know, you used to earn interest on that. Now, of course, it's extremely low, which is why people are seeking alternative solutions. Now this interest is not your grandmother's money market funds. As Sasha mentioned,
I believe, sometimes it's 60 to 80%. Like that's how much you're going to earn, you know, on an annual basis, which is huge in the world of interest. So you might think, well, that's awesome. What's the catch? The catch is, of course, like anything in this world, it's incredibly risky.
Also, you get paid in cryptocurrency. So you're earning that interest in the same currency in which you are investing the tokens or staking the tokens is what they call it. So it is not without risk for sure. It's actually the definition of risk. Still, you can get started and have fun for small amounts of money. And this is what I think is interesting because many of the new currencies
are priced in pennies or at least less than a dollar per token. So you can buy 100 or sometimes a thousand or more tokens for less than $100, sometimes a lot less. I mean, with $25, you can actually own a good number of tokens and experience how this world works and just learn a bit. And of course, whenever there is great volatility, and a lot of people are interested, which is certainly what we're seeing, some of them are making good money doing this. So it is possible if you really study the system to figure out where are the arbitrage opportunities, you know, what do I see that other people are missing. And because this is such a new market, there is a lot less efficiency
than there is in like the stock market. So over time, you know, when the stock market, it becomes harder and harder to make profits as an active trader, as opposed to someone who buys and holds, you know, for a long time. But in a new market, it is sometimes possible. So the guy in that podcast interview, for example, he was doing very well. So I mentioned that so everyone's aware of both the risks and the opportunities. For the right person out there, it is a real opportunity.
For others of us, it's an interesting thing to play around with, just to learn more about the new economy. And for a lot of people, probably the majority of people don't worry about this at all. You know, there's plenty of other stuff to keep your attention. So don't worry about this, just know that this interesting thing is happening and find something else, right? Because there is something for everyone. All right, I hope that helps as a good introduction, along with a referral
to learn more for those who are interested. Listeners, if you've got a question, come to sidehustleschool.com/questions. We'll be featuring them throughout the year along with updates from other listeners as they launch their projects. Let me know if you become a yield farmer or another farmer, I guess. All right, that's it for now. My name is Chris Guillebeau. This is Side Hustle School.
from The Onward Project.
