Captain Trading.com regularly covers the latest news on cryptocurrencies and decentralized finance (DeFi). Yield farming is one of the historic pillars of this ecosystem: it lets you generate passive income by making your liquidity available on decentralized protocols.
This article was originally published in September 2020, right in the middle of the “DeFi summer.” Back then, we picked 5 yield farming protocols that looked promising. Six years later, the verdict is damning: 4 of the 5 projects are dead, hacked or collapsed. Rather than hide that reality, we chose to turn this article into an honest retrospective — a real lesson in the risks of DeFi. We first explain what yield farming really is, then we revisit each protocol with its current status in 2026.
⚠️ Crypto risk warning. DeFi is an experimental and extremely risky space: hacks, fake protocols, impermanent loss, rug pulls and regulatory shutdowns are all common. None of the tokens mentioned here is an investment recommendation. Always do your own research (DYOR) before putting in a single euro.
What is yield farming?
Yield farming means lending or locking up your cryptocurrencies in a decentralized protocol to earn a return, usually expressed as APY (annual percentage yield, compounded) or APR (annual percentage rate, simple). In exchange for the liquidity provided, the user receives interest, a share of the transaction fees and/or governance tokens.
The key concepts to master
- Liquidity pool. A reserve of two assets (e.g. ETH/USDC) deposited by users that powers trades on a DEX.
- Liquidity Provider (LP). The person who deposits their funds into the pool. In return, they receive “LP tokens” representing their share.
- APY / APR. The advertised return. Be wary: triple-digit APYs almost always hide high risk or a token that’s collapsing.
- Impermanent loss. The unrealized loss you suffer when the prices of the pool’s two assets diverge sharply. It’s the most misunderstood trap in yield farming.
- Staking vs farming. Staking secures a network or locks up a single token for a return; farming means providing liquidity to a pair and exposes you to impermanent loss.
To actually take part, you first need a non-custodial wallet that gives you full control of your keys. If you’re just starting out, begin with our guide on providing your liquidity from a MetaMask wallet before touching a single protocol.
2026 update: what happened to the 5 protocols?
Here’s the real state of each protocol originally featured. It’s a perfect illustration of how fast a “promising” project can vanish in crypto.
Futureswap: from “decentralized Bitmex” to zombie dapp
Futureswap was a decentralized platform for trading futures contracts on Ethereum, using an AMM (Automated Market Maker) for its liquidity pools. It promised leverage of up to 20x with no slippage and billed itself as a “decentralized Bitmex.” Its Alpha pre-launch had generated $17 million in volume and $1.3 million in liquidity.
2026 status: abandoned project. The last audit dates back to 2021, activity has died out and the protocol is now described as a “zombie dapp.” Worse, it suffered three separate exploits in 2025 (over $1M combined), including a governance attack of roughly $830,000 via flash loan in December 2025. To really understand the leverage mechanics this kind of platform offered, check out our guide on crypto futures contracts instead.
DerivaDEX: a derivatives DEX still alive but tiny
DerivaDEX is a DEX specialized in derivatives contracts, built on Ethereum. It had two distinctive features:
- A decentralized autonomous organization (DAO) managing the protocol’s transactions and strategic decisions.
- No AMM but a classic order book with off-chain feeds to speed up transactions and avoid slippage.
Liquidity mining of the DDX token granted governance power and a share of the platform’s fees.
2026 status: it’s the only one of the “small” protocols still alive. DerivaDEX obtained a license from the Bermuda Monetary Authority in November 2025, which is fairly reassuring on the compliance front. But its TVL (total value locked) remains tiny, around $1.6M — a far cry from the “opportunity” the article originally implied. The technical description (off-chain order book, DAO, no AMM), on the other hand, still holds up.
Loopring: from “stable investment” to a -99% collapse
Loopring stood out by rewarding order makers with 8% of the fees paid by takers, with compensation calculated not only on volume but also on stability over time. It resembled a long-term investment, closer to a DCA-style strategy than pure speculation.
2026 status: complete collapse. In 2025, the smart wallet shut down (June 30), the DeFi products (Dual Investment, Portal) were sunset (July), the CEO resigned (August) and the LRC token was delisted by Upbit and Bithumb for non-compliance. The price fell roughly -99% from its all-time high, and the project pivoted to an L3 infrastructure. The promise of “8% to makers + loyalty rewards” no longer reflects the current state at all. A brutal demonstration that no crypto return is ever “stable.”
bZx: the worst-case scenario — hacked, then shut down by the courts
bZx (BZRX token) was a decentralized protocol enabling the lending and borrowing of liquidity for margin trading. In February 2020, it ranked among the top protocols by aggregate liquidity, and the team had launched a V3 with a conversion program to the vBZRX token.
2026 status: this is the most serious case. bZx was hacked for roughly $55 million in November 2021 (via the phishing of a developer’s private key). The protocol then migrated under the name “Ooki.” In 2023, the CFTC sued Ooki DAO and obtained a default judgment ordering the protocol to shut down, along with fines for the founders (Tom Bean and Kyle Kistner, $250,000). The protocol and its token are now dead. If you had followed the original incentive to “hold” this token, you would have lost everything — the best possible illustration of why DYOR matters.
AAVE: the only big winner, but transformed
In the famous Aavenomic of the time, stakers in the Balancer pools provided backing in case of a liquidity shortfall, and Aave worked as an insurance protocol that paid out via token issuance and transaction fees.
2026 status: Aave is the only genuine winner on this list. It’s still #1 in DeFi lending, with a TVL in the region of $60 to $75 billion and around 60% market share, plus a V4 on testnet. Be careful, though: the specifics described in the original article are outdated. The “Aavenomic” and the Safety Module via the Balancer pools have been replaced by UMBRELLA (deployed on June 5, 2025). The old stkAAVE / stkABPT still exist but with slashing disabled, their role now being mainly tied to governance.
The real lessons of the DeFi summer
This track record sums up the risks of yield farming better than any speech:
- Smart contract / hack risk is permanent. bZx lost $55M to a simple key phishing attack. No audit is an absolute guarantee.
- A high return is never “stable.” Loopring sold itself as a long-term investment and did -99%.
- Regulatory risk is real. The CFTC simply had Ooki/bZx shut down outright.
- Surviving doesn’t make you rich. DerivaDEX still exists, but with a tiny TVL.
- Diversification and solidity. Only the most robust protocol (Aave) made it through the cycle — and even it transformed entirely.
How to get started in 2026 without getting burned
Before venturing into complex DeFi protocols, it’s wiser to build solid foundations. A step-by-step approach:
- First, get familiar with crypto yields on a robust centralized exchange platform like OKX, which offers secure staking solutions and a more regulated framework than pure DeFi.
- Learn to manage your own wallet and keys before signing a single transaction on a decentralized protocol.
- Never invest more than you are willing to lose, and favor established protocols over the insane APYs of unknown projects.
FAQ — Yield Farming
Is yield farming profitable in 2026?
It can be, on established protocols like Aave, but the real return is often modest once impermanent loss and fees are deducted. Triple-digit APYs almost always hide very high risk.
What’s the difference between staking and yield farming?
Staking generally locks up a single token to secure a network and earn a return. Yield farming means providing liquidity to a pair of assets, which adds the risk of impermanent loss.
What is impermanent loss?
It’s the unrealized loss a liquidity provider suffers when the prices of the two assets in their pool diverge sharply. The wider the gap, the greater the loss compared to simply “holding.”
Do you need a wallet to do yield farming?
Yes, a non-custodial wallet is essential to interact with a decentralized protocol. It’s the first technical step, even before choosing a pool.
In this article, I’ve tried to simplify complex projects to make the information accessible — and to draw an honest conclusion about what happened to them. Some DeFi technologies remain hard to grasp without solid background knowledge, and the fate of these 5 protocols shows just how much caution is warranted.
Wishing you Rigor and Objectivity!
