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Home CRYPTO

Yield Farming on Cardano: A Step-by-Step Guide Using Minswap

Michael Juanico by Michael Juanico
December 12, 2024
in CRYPTO, DEFI, FEATURED, GUIDES
Reading Time: 5 mins read
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• Yield farming on Minswap allows users to earn tokens passively.
• Rewards accrue every second, allowing you to harvest them at any time.
• When you stake additional LPTs, any accumulated rewards up to that point are automatically sent to your wallet
.

Yield farming on Minswap allows users to earn tokens passively by providing liquidity to the decentralised exchange (DEX). Here’s a comprehensive guide to get started:

1. Providing Liquidity

  • Choose a token pair on Minswap and add liquidity to its pool, in our case, we are picking the CHAD/ADA pair as an example.
  • There are two methods to provide liquidity to a pool:
    • Deposit (Recommended): You deposit both Cardano token and ADA directly in a 1:1 ratio of their value.
      Example: If the current value of 1 $CHAD is 2 ADA, and you want to provide 100 ADA worth of liquidity, you will need to deposit 50 $CHAD and 100 ADA to maintain the 1:1 ratio.


https://minswap.org

  • Zapping: This allows you to add only one asset of the pair.
    Example: If you zap into the pool with 100 ADA, the system will automatically sell 50 ADA for $CHAD. This means half of your ADA will be used to purchase $CHAD at the current rate, and the remaining ADA and purchased $CHAD will be added to the pool. Similarly, if you zap in with 50 $CHAD, half of the $CHAD tokens will be sold for ADA, and the resulting ADA and remaining $CHAD tokens will be added to the pool.


https://minswap.org/liquidity?

  • In return, you’ll receive Liquidity Provider Tokens (LPTs), representing your share in the pool.

2. Staking LPTs

  • If the token pair has an associated farm, stake your LPTs in that farm to start earning additional rewards.
  • Rewards accrue every second, allowing you to harvest them at any time.
  • Be mindful of Cardano network fees (approximately 0.6 to 1.2 ADA) incurred during each harvest.

https://minswap.org/farm

3. Managing Your Stake

  • Adding more LPTs: When you stake additional LPTs, any accumulated rewards up to that point are automatically sent to your wallet. Your new, larger stake will then start earning rewards.
  • Partial withdrawal: Withdrawing a portion of your LPTs will also trigger the automatic transfer of accumulated rewards to your wallet. The remaining staked LPTs will continue to earn rewards.
  • Full withdrawal: Removing all your staked LPTs will send all accrued rewards to your wallet, and you’ll stop earning further rewards until you stake LPTs again.

Important Considerations

$CHAD Liquidity Pool ID: f5808c2c990d86da54bfc97d89cee6efa20cd8461616359478d96b4c.2307b504ffbe3736893f77d8cfe1118d064c72256911e9367dbee63b6b6b798c

Each deposit or withdrawal creates a pending Harvest UTxO with a 2 ADA fee; approximately 1.5 ADA is returned along with your harvested rewards.

Staking LPTs in yield farming is distinct from ADA staking. It’s non-custodial, meaning your LPTs are locked in a smart contract, and only you can withdraw them.

Every Cardano token has a unique Policy ID. Always double-check this Policy ID before buying tokens or providing any liquidity to a pool, as there may be several tokens with the same name, but never the same Policy ID. Projects usually provide this information in their BIOs, Discord channels, or official websites.

$CHAD Policy ID: 97075bf380e65f3c63fb733267adbb7d42eec574428a754d2abca55b

Every Liquidity Pool also has a unique Liquidity Pool ID. Similarly, double-check this ID to ensure you’re providing liquidity to the correct pool.

Disclaimer: BlockNews provides independent reporting on crypto, blockchain, and digital finance. All content is for informational purposes only and does not constitute financial advice. Readers should do their own research before making investment decisions. Some articles may use AI tools to assist in drafting, but every piece is reviewed and edited by our editorial team of experienced crypto writers and analysts before publication.
Tags: ADACHADLiquidity Provider TokensMinswapYield farming
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Michael Juanico

Michael Juanico

Michael is a BSBA Management graduate from Mindanao State University and has been a professional content writer since 2019. He began exploring cryptocurrency in 2021 and has since made blockchain and digital assets his primary focus. For nearly four years, Michael has contributed research and editorial content at Aiur Labs and BlockNews, producing clear and accessible coverage of market trends, trading strategies, and project developments. He is transparent about his personal holdings in Bitcoin, TRON, and select meme tokens, combining writing expertise with hands-on market experience to deliver trustworthy insights to readers.

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