I invested $15,000 of my own money into
5 different farms on PancakeSwap
In this video, I'm gonna show you exactly how to yield farm,
how this can easily earn the average investor between
$5 and $100 per day
and how much money actually made
doing this for one week.
Before you can touch PancakeSwap,
you need to set up a crypto wallet that supports
the Binance Smart Chain.
Luckily for us, the crypto wallet that most us are familiar with,
MetaMask, is perfect for this, so we'll be using that today.
You just have to Google "MetaMask extension",
install it, choose a password and
Please don't. If someone else gets a hold of that,
you could lose all of your money.
So keep that in a very, very safe place.
Now that your wallet is set up, you need to buy
some usable tokens for PancakeSwap.
Any BEP-20 token will work.
BUSD and BNB are both great options.
So once you buy BUSD or BNB on the exchange of your choice,
send those tokens to your MetaMask wallet
and you'll be ready to go.
I'm buying and sending BNB from Kucoin,
which I will have linked below if you want to use them
for some discounted trading fees.
Now you just need to connect MetaMask to PancakeSwap.
Go to pancakeswap.finance
Click Connect wallet in the top right.
Pick MetaMask. Click Connect.
And then depending on what network you're already on,
it will ask you to switch to Binance's network.
So you can just click Switch Network if you see it
and then you're all set.
Your wallet is connected.
Now from here you'll just want to click the link for Patreon
in the description of this video if you want
even more money making content, buy alerts, daily signals,
a whole lot more.
There's a reason we have more than 10,000 satisfied members.
How is that for a smooth pitch? [Laughs]
Anyways, before we go in deep,
PancakeSwap is an automated market maker or AMM
that allows two tokens to be exchanged on the Binance Smart Chain.
The liquidity on PancakeSwap allows users
to exchange their crypto and that liquidity
is provided by users as well.
And that's how you actually make money.
This is exactly what I'm going to show you how to do today.
Providing liquidity for trading pairs
for others to trade aka Yield Farming,
aka passive income for you.
The way that you make money is through a combination of
transaction fees and platform tokens.
More on that in a minute.
So let's go ahead and jump into
all the different features available on this site.
Starting out with the trading page, we have
Exchange and we have Liquidity.
With Exchange, this is where you exchange
one crypto for another, simply swapping cryptos
similar to a spot trade.
And then we have liquidity, this is where you'll see your
current LP tokens.
You can think of an LP token as a receipt.
You deposit your cryptos into a pool
and you receive an LP token
showing the assets that you deposited.
For this video, I provided liquidity to five different pools,
so I received five different LP token types.
But how do you actually make money from this?
Great question.
Let me present you the Earn page.
Here we have Farms and we have Pools.
Farming is a method of passive income with crypto
where you supply a one to one ratio of two cryptocurrencies
as liquidity for a trading pair.
Don't worry, you'll understand all of this.
And in exchange for doing so,
you'll receive those LP tokens,
your receipt for providing those cryptos.
I like to think of each farm as a small business.
If a business has $100 in total assets
and you provided five of those dollars,
you are simply entitled to 5% of the profits for that business.
What's also cool is that LP tokens,
that receipt showing your ownership
of this small business for providing your assets.
The LP tokens entitle you to a few things.
First, a portion of the fees generated by the trading pair,
plus the tokens themselves are stakable,
so you can earn even more of that juicy passive income
simply from having those tokens and staking them.
So let's say you wanted to put $3,000
into a CAKE-BNB liquidity pool.
You would need to go to Farms,
find the pair that you're looking for,
and then click Get CAKE-BNB LP.
Then you would supply $1500 worth of CAKE
and $1500 worth of BNB.
You can also do this through the liquidity screen that I showed you,
but this way you don't have to select the specific coins.
Here, in exchange for the $3,000 you would get the
LP token receipt for what you supplied to the pool.
Then those LP tokens will show up
in the liquidity section.
You can then take those LP tokens
and stake them in their corresponding farm
by clicking on the pair that you provided liquidity for
enabling the farm, which can take a second.
Then you click Stake LP.
Click Max for the amount,
and then click Confirm on both PancakeSwap and MetaMask,
once it prompts you.
It's also worth noting that the APR shown on
each farm is a combination of the transaction fees
earned and the LP rewards.
And then you can even take that CAKE that you receive
in rewards from staking and
stake it again for even more CAKE.
This is done on the next page, Pools.
It's like this machine of earning passive income
from every end, and
I know this might seem like a lot, but just
hang in there with me and I promise you'll get it.
I think the fact that these things aren't very user-friendly
gives us more opportunity to
earn even more money because most people aren't
going to figure this all out, but here you are.
Now, it's also important that you understand
First, of course, the cryptos that you're providing
can decrease in value or increase.
That's no different than buying any crypto.
But you need to be aware that
within a farm that can also happen.
But we also have
If you're in economics, you can think of this as
kind of opportunity cost.
Impermanent loss is what happens when the
price of one crypto that you provided liquidity for
changes relative to the other, more dramatically.
So let's say you supply $500 of CAKE
and $500 of BNB into a liquidity pool
and then BNB's price skyrockets but CAKE's doesn't.
What happens here is you actually end up
earning less than if you would have just
held BNB outright outside of a pool.
This is because the liquidity pool
will constantly rebalance your holdings,
so it's always 50-50 for each asset.
50%-50%
You're not exactly losing money,
but you're losing the opportunity to make more money.
I like to think of it as the cost of
doing business, because in most cases, you will earn
But there are occasions where you may
have that impermanent loss.
Here's a chart showing the impermanent loss percentage
relative to the change in price.
In a nutshell, you're putting multiple cryptos
into a liquidity pool and taking on the risk
of impermanent loss
However, this is in exchange for the right to a certain percentage
of all fees generated by the pool,
aka crypto passive income.
Now let's move on.
Next is the win page.
Here you can bet on the short term price movement
of BNB to win multiples of whatever you bet.
The lottery page is where you can buy tickets for $5 and
hope that you win the pot.
I don't really dabble here.
And lastly, we have the PancakeSwap NFT market
*One week later*
$15,000 total into five different farms,
and here are the results after seven days,
As you can see, not so good.
I provided liquidity for five different pairs
BUSD, CAKE, USDT, MBOX, and ADA,
all of which were paired with BNB.
And in the seven days that I was running this experiment,
every single coin was down a significant percentage.
But don't worry, I've done the math
because I did earn money.
Timing my buy-ins couldn't have been much worse
but there were still rewards generated.
And hey, that's investing and it's
my job to be transparent about the results.
So even though the ending values are down, we
did earn quite a bit of CAKE from the
base farm rewards and money from LP rewards.
If we take a look at the percentage change,
we can see how much I'm down on each farm.
That has nothing to do with farming.
In fact, farming saved me money.
It's important to compare my positions
to the percent that I would be down
if I just held the cryptos outright.
Not in a farm, not staking, just in a wallet somewhere.
Somewhere, I lost less money on every single pool
than I would have if I just held the cryptos.
I've broken it down so we can see
how much I made in fees and LP rewards generated.
Looking at the totals from pool fees and LP rewards,
I made a total of $152 from farming
off of my investment of $15,000 in seven days,
which is a whopping 1% return in seven days
or 68% annualized.
I think yield farming is best with cryptos that you
plan to hold long term anyways.
This is because you won't care if prices drop
10% like they did for me, because you're still
earning more than you would have holding outright.
So if you plan to hold long term anyways,
there really is only upside here.
So in a vacuum it would have taken
$34,500 to generate $50
every day in passive income
from yield farming based on these numbers.
Now, obviously, you need to take into account
negative price fluctuation and changes in trading volume,
which can affect your APY.
Something else to consider is you can
take on a safer strategy to yield farming
and only farm pairs with a stablecoin.
The consensus here seems to be that you can reliably make
15% to 20% API in these pools, stablecoin pools
with much less volatility risk.
So assuming a 20% return annually, it would
take about $92,000 to maintain $50 per day in passive income.
Now, let's say 20% isn't good enough for you.
You want the highest returns possible.
Well, there's no set in stone best way to go about this,
I wanted to take a look at a research paper
by nansen.ai, looking at yield farming activity.
And as you can see, 36% of all farmers
who join a farm, exit within the first 5 days.
And this makes sense, because the juiciest
rewards will come at the launch of a farm
for the sake of attracting new farmers
before yields decrease.
So it seems based on this activity
that the best strategy for the highest yield possible
is to look for new farm opportunities,
hop in and then move on before
rates start dropping or volatility really starts kicking in.
To further illustrate this point, nansen.ai
pointed out that a whopping 42% of farmers
who join on the first day of a pool
leave within the first 24 hours.
Now, of course, this is a higher risk strategy
and much more work, and I'm not sure that we could
call it passive income at this point,
but that is the way to earn the highest yield possible here.
So if you appreciate my efforts and transparency in this topic,
please consider hitting the subscribe button.
It's free, and you can always change your mind later.
And from here, I recommend you check out this video that
highlights the best possible passive income
that you can get by lending out your stablecoins.
It's much less work than yield farming.
So I'd like to thank you so much for watching,
and I hope you have a profitable day!