# Yield Farming with Leverage: How to Maximize Returns Yield farming is one of the buzzwords that came out of DeFi’s rise to prominence in 2020. People are generally aware that it involves depositing money and getting rewards — but how does it actually work? ### What Is Yield Farming? In simple terms, yield farming involves lending your cryptocurrency to DeFi platforms that operate with [Automated Market Maker (AMM)](/education/yield-farming-glossary.md#amm-automated-market-maker) models and require liquidity. Of course, to lend out their tokens, users need to be compensated, which is why high APY, other rewards & giveaways, and gamification is employed by DeFi apps to incentivize farmers to provide liquidity to them. ### How Does Yield Farming Differ from Staking and Liquidity Providing? While all three of these methods are used to gain greater rewards than simply holding your cryptocurrencies, there are some distinct differences. #### Staking Staking involves providing assets to be used as collateral for decentralized nodes in networks that operate with the Proof-of-Stake (PoS) consensus algorithm. Stakers are chosen to validate transactions and secure the network, incentivized with rewards to do so. #### Liquidity Providing Very similar to yield farming, liquidity providing is the practice of providing funds to DeFi protocols by depositing in pools such as BTC/USDT, receiving rewards in the the form of LP tokens (which represent a 50:50 split of the tokens in the pool that has been invested in), often as well as governance tokens which allow users to have a say in the direction of a protocol. #### Yield Farming As stated above, yield farming helps provide liquidity to platforms that operate using AMMs. Rather than LP token rewards, users get a high APY return in one of the tokens they invested in, or sometimes even in a third coin. As with liquidity providers, governance tokens can also be thrown in as an extra incentive, as well as airdrops of certain tokens and other rewards. ### How Can Farming with Leverage Help Maximize Your Rewards? Yield farming is defined by its fluidity and the ability to make great returns, which is why it has become so popular. Leveraged yield farming brings together the phenomena of yield farming and leveraging assets so that farmers can gain even larger rewards! PembRock Finance allows farmers to leverage anywhere between 1.25 and 3x their initial crypto investment, meaning they can benefit from farming greater amounts. Just a 10% fee is taken, while you keep the rest of the profit gained on borrowed funds. **To see more about how leveraged yield farming works on our platform,** [**check out our user story here**](https://docs.pembrock.finance/about-pembrock/user-story-farmer)**. To learn more about the associated risks,** [**visit this page**](/risks/risks-for-farmers.md)**.** --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.pembrock.finance/education/leveraged-yield-farming-education/yield-farming-with-leverage-how-to-maximize-returns.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.