Yield farming is a term coined around June 2020 after the launch of the COMP governance token by Compound. A surge in the interest of liquidity mining programs by Compound, Synthetix, and eventually yearn.finance led the greater DeFi community in Ethereum to create a meme around farming yield--a more clever way to describe liquidity mining.
Here's how you can recognize or define yield farming:
🌽 It often involves providing liquidity, lending, or staking
🌽 It only requires an Ethereum wallet like MetaMask and no KYC--meaning no centralized finance (CeFi) is involved. It's permissionless to access the program.
🌽 It often involves earning multiple forms of yield: lending interest, trading fees, and pooled inflationary rewards (ie governance tokens).
If you'd like to learn more about how to get started with yield farming in DeFi, watch this DeFi Class from a Yield TV episode.