It is a high-risk, high-reward strategy that involves actively moving assets between different lending platforms or liquidity pools to find the highest possible yield. The process is often complex, involving strategies like depositing into liquidity pools, reinvesting gains, and staking tokens for additional rewards. 

How yield farming works.

1. Provide liquidity: You deposit your crypto assets into a liquidity pool on a DeFi platform. These pools are essential for the platform to facilitate trading, lending, and other financial activities.

2. Earn rewards: In return for providing liquidity, you earn rewards, which can be in the form of interest or new tokens. For example, providing tokens to a liquidity pool on a decentralized exchange allows you to earn a share of the trading fees generated by that pool.

3. Reinvest and compound: Yield farmers often reinvest their earned rewards to compound their returns, which can increase their overall yield.

4. Use complex strategies: Advanced yield farmers may engage in multi-layered strategies, moving assets between different protocols to maximize returns. They might also use leverage to increase their position size.

Key risks

1. Smart contract vulnerabilities: Yield farming relies on smart contracts, and any bugs or vulnerabilities in the code could be exploited by hackers, leading to a loss of funds.

2. Impermanent loss: This is a risk specific to liquidity providers. It occurs when the price of the tokens you've deposited into a pool changes relative to each other, causing the value of your holdings to be less than if you had simply held them outside the pool.

3. Market volatility: The value of the reward tokens you earn can fluctuate significantly, potentially eroding the profits you might have made.

High gas fees: Transactions on some networks, like Ethereum, can incur high fees, which can reduce the profitability of yield farming strategies, especially those with small returns.

Yield farming vs. staking

1. Yield farming: Actively uses your crypto in DeFi protocols to earn rewards, often with high potential returns but also higher risk. It is more dynamic and involves a wider array of strategies, notes Hacken and Investopedia.

2. Staking: Locks up your crypto as collateral for a blockchain's consensus mechanism, with lower but more stable returns, says Gemini Trust.