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Token Farming

Definition ∞ Token farming is the practice of earning new cryptocurrency tokens by providing liquidity or staking existing assets within decentralized finance protocols. This process is designed to generate yield or additional tokens for participants. It leverages existing digital holdings.
Context ∞ Token farming is a prevalent yield-generating strategy within the decentralized finance (DeFi) ecosystem, contributing significantly to protocol liquidity. However, participants must consider associated risks, such as impermanent loss and potential smart contract vulnerabilities, when engaging in these activities.

Smooth, translucent white and deep blue forms interweave, suggesting a dynamic flow within a complex system. The layered structures evoke a blockchain architecture, where digital assets move through decentralized finance protocols. These abstract pathways visualize smart contract execution and the intricate data streams of a liquidity pool. The interplay of light and shadow highlights the depth of network topology, representing the seamless transaction flow and interoperability essential for Web3 infrastructure. This abstract representation underscores the underlying mechanisms of tokenomics and protocol layers.

→Malicious Package

→Web3 Infrastructure

→Token Farming

Open-Source Registry Polluted by Automated Token Farming Supply Chain Attack

An unprecedented supply chain attack polluted the npm registry with 150,000 malicious packages to exploit a token reward system, demonstrating critical open-source risk.