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What Is APY in Yield Farming?

Yield farming is the practice of staking or lending crypto assets in order to generate high returns or rewards in the form of additional cryptocurrency. This innovative, yet volatile investment practice in decentralized finance (DeFi) has skyrocketed in popularity thanks to further innovations like liquidity mining, where investors lock their liquidity pool tokens in a smart contract to earn additional rewards.
These additional rewards can be a percentage of transaction fees, NFTs or a governance token. These returns are expressed as an Annual Percentage Yield or Returns (APY or APR) which is equivalent to Annual Interest Rate in traditional finance. As more investors add funds to the related liquidity pool, the value of the rewards decrease accordingly. 

What are Liquidity Pools and How do they Work?

Liquidity pool is a supply of tokens that are locked into a smart contract which facilitate efficient asset trading while allowing investors to earn a return on their pooled assets. A healthy supply of liquidity from a variety of providers are essential to the long-term growth and stability of a crypto asset, so protocols reward liquidity pool providers with high APYs.

How to add Liquidity to CaliCoin Liquidity Pool

The following example demonstrates what happens when a user contributes to a liquidity pool on PancakeSwap, After adding your CALI/BNB assets, you will receive PancakeSwap LP tokens, which represent a share of the provided assets in the PancakeSwap smart contract.

When supplying liquidity to PancakeSwap, the assets need to be provided in 50/50 proportions. That is, when adding $500 in liquidity to the CALI/BNB pool, $250 in CALI and $250 in BNB must be added, for the liquidity to be approved.

Visit the PancakeSwap liquidity page and add equivalent amount of $CALI/BNB pairs

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