Liquidity provision means depositing token pairs into a pool so users can swap, earning fees from their activity. Farming usually refers to depositing LP tokens into a separate rewards contract to earn extra incentives on top of swap fees. Staking involves locking a single token (not a pair) to secure the network or support a protocol and earning rewards for doing so. Liquidity provision exposes you to impermanent loss, while staking typically does not. Farming adds an additional reward layer but often comes with higher smart-contract risk. Each method suits different goals: passive fees, boosted yields, or network participation.
What’s the difference between liquidity provision, farming, and staking?
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