Yield farming involves providing liquidity to DeFi protocols, such as lending or decentralized exchanges, in exchange for rewards, usually in the form of tokens. The more liquidity you provide, the higher your potential yield. Users typically supply assets to liquidity pools, and in return, they earn interest, trading fees, or additional platform tokens. While yield farming offers attractive returns, it comes with risks like impermanent loss, smart contract vulnerabilities, and market volatility. Effective yield farming requires active monitoring and strategic allocation to balance risk and reward.