# Yield Farming
MistSwap uses an algorithm to determine reward weights. Read more about it here.
# What is Yield Farming?
When people say they are yield "farming," they just mean that they're giving something to a platform (usually by staking their assets) that justifies paying out an annualized percentage yield (APY). Often, this effort entails adding liquidity to a network, and then staking liquidity provider tokens, or adding liquidity to a market for borrowing and lending. Projects incentivize this behavior when it enables them to function more efficiently. Mist has by and large the most effective system in DeFi for farming yield. This is in part because nearly every token on Mist is natively yield bearing, which enables Mist to function very efficiently. In Mist's case, adding liquidity to any branch of the platform allows the platform as a whole to be more efficient. It has its own exchange (MistSwap), and it has staking derivatives (xMIST), and will have additional ways to gain yield in the future. Mist is able to deliver a compounded yield farming experience by "stacking" these yields in simple procedures.
# How do I stack yield?
There's two types of yield on Mist and therefore two types of yield you will see throughout Mist. Mist is arguably the only place where you can effectively stack these two yield types on top of each other. If you really want to understand the full scope of Mist, you should try to understand how to stack these yields.
Here is a description of the two types of yield:
Protocol usage: Whenever someone makes a trade on MistSwap, 0.25% swap fees are distributed among a liquidity providers (https://app.mistswap.fi/pool (opens new window)), and 0.05% of all swaps on all chains are accrued by xMIST holders (https://app.mistswap.fi/stake (opens new window)).
Network tokens: MLP tokens are given rewards (https://app.mistswap.fi/yield (opens new window)), and these rewards further optimize your impermanent gain (yields earned through volume and volatility).
# Simple Stacking: Two Types of Yield
Now that you know what the two forms of yield are, you can try to stack them yourself. Start small if you like, by finding a token pair that you want to hold, and using it to stack two types of yield on Mist. Usually, the pairs require BCH and a second token, but the following example can be any pair that's on the permanent menu:
- Provide liquidity on MistSwap by entering a pool that is incentivized by Mist (https://app.mistswap.fi/pool (opens new window)).
- Deposit the liquidity token (MLP) you received after supplying liquidity into a yield farm (https://app.mistswap.fi/yield (opens new window)), and earn MIST.
- Stake your MIST rewards for additional yield (https://app.mistswap.fi/stake (opens new window)), and earn XMIST.
Unstaking or adding MLP tokens to a farm will automatically harvest any rewards you have available. A good way to save on gas.