Whales profit mightily from lucrative DeFi yield farming: Data shows

DeFi has not only led to huge rallies in the prices of governance and reward tokens like YFI and LEND but it has also given way to a new-found interest in cryptocurrencies.

The release of liquidity protocols like Uniswap and Curve gave way to an explosion in DeFi, with even institutional clients gaining interest in acquiring yield on their crypto holdings.

While some major DeFi tokens have seen accentuated price corrections recently, activity in the sector itself has been recovering following the sharp 40% drop on Sept. 18.

While the total value locked dropped from $13.25 to $6.3 billion in just 4 days, it has now recovered to roughly $9.5 billion locked, according to data from DeFi Pulse.

Most yield farming ventures last only a few weeks or even days, whilst the displayed APY's reflect the interest earned for an entire year.

How much are whales earning?To look deeper into the issue of misleading yields, Flipside Crypto built a calculator that measures the interest being earned on Yearn.

Through this the data intelligence provider was able to determine the exact amount some of the biggest whales in the crypto sector were able to earn from staking in yVaults.

Using the yCRV vault, which leverages Curve to earn holders interest, Flipside Crypto concluded that one whale in the yCRV vault locked over $97 million worth of yCRV tokens and eventually made a $800,000 profit after three weeks.

Another whale invested $40.6 million in the same vault and was able to secure a $500,000 profit in the same period of time.

Are liquidity pools worth the risk?The yCRV vault is relatively safe, as it does not rely on the price of yCRV, but rather on the price of the token's underlying DAI, USDC, USDT, and TUSD stablecoins which can lose their peg.