Yield farming
Also known as: liquidity mining, farming
Moving crypto between DeFi protocols to maximise returns; rewards are generally income and the moves can trigger disposals.
Definition
Yield farming is actively allocating crypto across DeFi protocols (lending, liquidity pools, staking) to earn the highest available returns, often paid as reward tokens. Tax-wise, reward tokens are generally revenue income at receipt, while entering and exiting pools and swapping tokens can be disposals. The frequent activity points toward revenue treatment and demands strong transaction-level records.
Example
You deposit tokens into a pool and harvest reward tokens weekly; the rewards are income, and swapping or exiting positions can be disposals.
Jurisdiction notes
- South Africa: Yield-farming rewards are generally revenue income; pool entries/exits and swaps can be disposals. Frequent activity suggests revenue treatment.
Primary sources for South Africa: browse the official documents