What is farming?

Learn how farming works on STON.fi, why projects launch farms, and how staking LP tokens adds an extra reward layer on top of liquidity provision.

In this guide you’ll: ✅ Understand what farming is and how it works ✅ Learn how LP tokens are used in farming ✅ See where rewards come from ✅ Understand key conditions like lock-ups and farm duration

What is farming (in simple terms)

Farming is an additional layer on top of liquidity provision.

You provide liquidity to a pool and receive LP tokens. Then you stake those LP tokens in a farm to receive extra rewards distributed by a smart contract.

💡 In short:

• Liquidity provision gives you LP tokens.

• Farming uses those LP tokens to receive additional incentives.

Why farming exists

Projects want deeper liquidity in their pools so users can swap larger amounts with lower price impact.

To incentivize this, a project can launch a farm:

• It allocates a reward pool (usually in its own token)

• A smart contract distributes these rewards among participants

• The more LP tokens you stake, the larger your share

Farming is simply a way to encourage users to keep liquidity in specific pools.

What you receive

When participating in farming, you get:

• A share of swap fees from the liquidity pool • Additional rewards from the farm (often the project’s token)

Types of farms

Farms can differ in how they operate. For example, ongoing farms have no fixed end date. Rewards continue as long as the farm is funded. Fixed-period farms run for a limited time with a predefined reward pool.

What you need to participate

To join a farm, you need:

• LP tokens from the selected pool • A connected non-custodial wallet • A small amount of GRAM for transaction fees

What to keep in mind

Farming introduces additional factors compared to simple liquidity provision:

• Your LP tokens may be locked (depending on the farm) • You need to manage your position (claim rewards, unstake) • Your underlying liquidity is still exposed to pool dynamics (see Impermanent loss)

Bottom line

Farming is a mechanism that distributes additional rewards to liquidity providers who stake their LP tokens. It helps projects strengthen liquidity, and gives participants an extra incentive to stay in the pool with clearly defined conditions.