Yield Farming

Yield farms are another novel concept that originated in DeFi and have since become integral to the ecosystem, especially for Automated Market Makers (AMMs) such as Sushi. Combined with liquidity pools, yield farms offer yet another way for users to stack yield.

Yield farms utilize Sushi Liquidity Provider (SLP) tokens, which are given to liquidity providers (LPs) when providing liquidity to a pool. These SLP tokens represent a LP’s portion (in percent) of a specific pool and can be “staked” in a yield farm. LPs that choose to stake their SLP tokens in a farm earn additional $SUSHI rewards on top of the swap fees that are already accruing. Of course, SLP tokens can also just be held after LPing as well to accumulate the swap fees only - yield farms are simply an additional way to make more money on the liquidity an LP has provided.

Onsen Farms

There is a special type of farm that Sushi offers known as an Onsen farm. Onsen is a liquidity provision reward system for tokens that are relatively new or have been seeing a lot of action lately and pay out in double the rewards! Instead of solely receiving $SUSHI as a reward, Onsen pools pay out in both $SUSHI and the native, non-base token in the farm (the first half of the pair). LPs that choose to park their LP tokens in an Onsen farm are receiving three different types of yield: swap fees on the pair from the liquidity pool, as well as $SUSHI and native token rewards from the Onsen farm.