How to Start Yield Farming: A Step-by-Step Guide
A step-by-step guide to starting yield farming: choosing a chain, funding a wallet, picking a pool, reading APR vs APY, managing impermanent loss and leverage, and exiting cleanly.
Last updated: July 2026
Most yield farming guides explain the concept and then stop exactly where the reader needs help: the part where you have a wallet, some capital, and no idea which of forty pools to actually click. This one is the procedure. If you want the conceptual background first, start with our beginner's guide to yield farming and come back.
Nine steps, in order, with the decision criteria for each.
Step 1: Set up a wallet for the right chain
Yield farming is chain-specific. A wallet that works on one network will not sign transactions on another, so the wallet decision follows the chain decision, not the other way round. MultiversX uses xPortal or the MultiversX web wallet. Sui uses Sui-compatible wallets. Radix uses the Radix Wallet. EVM chains use MetaMask and its equivalents.
Write the seed phrase down on paper. Store it somewhere a house fire would not reach. This is the one step in this list where a mistake is unrecoverable.
Step 2: Choose the chain deliberately
Chain choice determines your fee overhead, which in turn determines your minimum viable position size. On a chain with high transaction costs, a small position can spend a meaningful share of its annual yield on the deposit, harvest and exit transactions alone. On low-fee chains, compounding frequently is cheap and small positions remain viable.
JewelSwap operates on MultiversX, Sui and Radix, all of which have low transaction costs relative to Ethereum mainnet. If your search brought you here looking for how to farm on BNB Chain or Ethereum, the procedure below still applies step for step; only the wallet and the venue names change.
Step 3: Fund the wallet and keep a gas buffer
Bridge or buy the chain's native token first, then the assets you intend to farm with. Always leave a gas buffer untouched. A position you cannot exit because you have no native token left to pay for the transaction is a genuinely common and entirely avoidable failure.
Step 4: Pick the pool type that matches your risk appetite
This is the decision that determines everything downstream.
| Pool type | What you deposit | Main risk |
|---|---|---|
| Stablecoin pair | Two stablecoins | Lowest impermanent loss; depeg and contract risk remain |
| Correlated pair | An asset and its liquid staking token | Low divergence risk while the peg holds |
| Volatile pair | Two independent assets | Full impermanent loss exposure |
| Single-asset | One token | No two-asset divergence; directional exposure instead |
| Leveraged farm | Collateral plus borrowed funds | Amplified returns and liquidation risk |
Start with the top of that table. A first farm should be a stablecoin or correlated pair, sized so that a total loss would be an annoyance rather than an event.
Step 5: Read the yield number properly
Advertised yields are the most misread number in DeFi. Three things to check before believing one.
- APR vs APY. APR is the simple rate. APY assumes returns are reinvested and compounds them. The same farm quoted as APY will always look better than quoted as APR, without earning a cent more.
- What the yield is paid in. A high APR paid in a token whose price is falling faster than the yield accrues is a negative-return farm. Check what you are actually being paid.
- Whether it is auto-compounded. Manual compounding costs a transaction each time and requires you to remember. JewelSwap's yield farms auto-compound, so the position rebuilds itself without you clicking harvest.
Step 6: Understand impermanent loss before you deposit
In a two-asset pool, the pool rebalances between the assets as their relative price moves. If they diverge, the value of your withdrawn position can end up below what you would have had by simply holding both tokens. That shortfall is impermanent loss, and it becomes permanent the moment you withdraw.
It is not a reason to avoid farming, but it is a reason to compare fee and reward income against expected divergence. If you want to avoid the mechanism entirely, single-sided pools sidestep the two-asset rebalance. Our explainer on single-sided liquidity covers how that works and what replaces the risk.
Step 7: Deposit
The mechanics are consistent across venues: connect the wallet, approve the token for the contract, then deposit. The approval and the deposit are two separate signatures, and the first one is where phishing sites do their damage. Verify the URL from an official source rather than a search result or a message.
On JewelSwap, farms run on established venues on each chain, AshSwap, OneDex, Hatom and xExchange on MultiversX, and Cetus, Turbos and Scallop on Sui, with the strategy handled by the protocol rather than by you.
Step 8: Decide whether to add leverage, later
Leveraged yield farming borrows against your position to farm a larger size, multiplying both yield and loss. It is a legitimate strategy and a bad first one. If you do use it, the number that matters is not the advertised yield, it is the distance to liquidation. Our guide to leveraged yield farming covers the mechanics and the failure modes.
Step 9: Monitor and exit on a plan
Set a review cadence and stick to it. Check that the yield is still what it was, that reward token prices have not collapsed, and that any borrowed position still has healthy headroom. Decide your exit condition before you need it: a target return, a time horizon, or a yield floor below which the position is no longer worth the risk. Then withdraw, unstake and close in one session rather than leaving dust positions scattered across protocols.
Frequently asked questions
How much money do I need to start yield farming?
There is no protocol minimum, but transaction costs set a practical floor. On low-fee chains such as MultiversX, Sui and Radix, small positions remain viable. On high-fee networks, deposit and harvest costs can consume the yield on a small position entirely.
Is yield farming still profitable?
It can be, but returns have normalised well below the early incentive-driven era. Sustainable yield now comes primarily from trading fees, lending interest and staking rewards rather than token emissions. Treat any advertised triple-digit APR as a signal to check what is funding it.
What is the difference between APR and APY?
APR is the simple annual rate with no compounding. APY assumes rewards are reinvested and compounds them over the year. For the same underlying yield, APY is always the larger number, so comparing an APY at one venue against an APR at another is not a like-for-like comparison.
How do I start yield farming on BNB Chain or Ethereum?
The process is identical: install a compatible wallet, fund it with the native gas token, choose a pool on a reputable venue, approve and deposit, then monitor. JewelSwap itself operates on MultiversX, Sui and Radix, so the farms described here are on those chains.
What is auto-compounding and why does it matter?
Auto-compounding means the protocol harvests rewards and reinvests them for you. It matters because manual compounding costs a transaction fee each time and depends on you remembering. Automated compounding captures the compounding benefit consistently without per-harvest effort.
Can I lose money yield farming?
Yes. The main routes are impermanent loss in two-asset pools, decline in the price of the reward token, smart contract failure, and liquidation if you farm with leverage. Position sizing and starting with correlated or stablecoin pairs are the standard mitigations.
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