# Yield Farming for Interdependence

**Published by:** [Shadowsweat](https://paragraph.com/@shadowsweat/)
**Published on:** 2022-02-08
**URL:** https://paragraph.com/@shadowsweat/yield-farming-for-interdependence

## Content

We live in a world where everything depends on everything else. nothing can exist on it’s own. we only know things by their relationship to other things. But in many of our modern neo-liberal capitalist societies much of this lies hidden as we are continuously siloed and sequestered in our little corporate-owned bubbles, listening only to echoes. Most of the safety and security we feel when we go to the store, knowing that the prices we see today will be very similar to what they were yesterday is actually an illusion propped up by complex financial instruments, like futures contracts, and trade deals that smooth over the actual volatility of our planet and allow us to determine stable prices for commodities. This is basically magic, when you really look at it; it’s all strange incantations that seem to work as long as we believe in them. Crypto doesn’t have the same infrastructure and wide adoption which is why the volatility is so high right now. (Also much of the volatility in traditional systems is mitigated by printing money and artificially lowering interest rates, but that’s for another discussion). But something that I’m very interested in is the idea of Yield Farming. for the uninitiated it’s a pretty mind-bending concept. but I see it as essentially performing all the main functions of a bank in a decentralized way. When you hold a certain amount of a currency in a bank, while it’s just sitting there, the bank will put it to use by lending it out at interest (fractional reserve banking). Ideally they share this interest with you, but in practice it’s barely anything meaningful (0.1% APY). The reasons why are probably pretty complicated, but my opinion is that it’s because banks can basically create money out of thin air when they lend it out. there are restrictions to this, of course, but that’s kind of how it all works. Yield farms allow you to do this, but instead of some intermediary, like a bank, skimming all the profits off the top and paying you a paltry 0.1% all the yields are split equally by everyone who puts there money in this account to lend out. This results in much higher rates depending on the supply/demand of the asset. That’s cool, but why would anyone borrow? Sometimes we hold assets that we really like or need for one reason or another. Maybe they’ll go up over long time periods and we want to hold them, maybe they’re important culturally, maybe we just want to maximize our gains and turn that illiquid asset into one that’s more easy to use without actually selling it. eventually this will all get more and more complicated and there are tons of resources out there that describe how yield farming work in much more detail, but the reason I’m writing this is not to teach you about how it works but to lay out an interesting potential emergent effect of the mass adoption of yield farming. In the future, as more and more tokens and digital assets gain adoption we will find more necessity for lending and borrowing and providing liquidity for assets we don’t need right now. essentially turning all assets into a communal ownership structure. I imagine that as all of this starts to become accepted, there will be an infinitely complex web of lending and borrowing, arbitrage and liquidations, and insurance built to safeguard those positions. The result from this will look like something between a UBI and subsistence farming. I think that the only way for a fully decentralized financial system to work is for everyone participating to realize the fact that they are dependent on everyone else and everyone else is dependent on them. In Sacred Economics, by Charles Eisenstein, a theory is expressed that prior to money much of our interactions within our tribe were governed by reciprocity. If you did a favor for me, and I didn’t have anything immediately to repay your favor then I just owed you another favor. In a way this hyperextended yield farming web of assets is a more quantified version of this IOU mentality. Especially as cultural artefacts become tied up in this web, artefacts that have vastly divergent subjective value to different people. Eventually I think this will turn into a gorgeous abstracted picture of the true interdependence of everything. Just like how everything in a forest is dependent and in competition with everything else in the forest. Stable assets like trees will grow; networks like mycelium will connect, gorgeous exotic flowers will bloom, food chains of assets and products will emerge with everything’s true value being made more obvious due to the strange quantification we’ve subjected it to, so that we’re not confused into prioritizing apex predators, but all the important assets in the chain. It will become even more organic as many of these assets won’t just be tokens but will be actually useful digital objects that people need to perform daily functions. Now I’m not saying that is is necessarily a good thing, I have no idea what problems will emerge from this and whether they are problems that we as humans will be excited to solve. But I find it a really interesting model that could emerge from this radically different ecosystem we’re developing.

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