I recently noticed that many crypto investors still don't understand the difference between simple farming and looping. Let's figure out what this really means and why it's important to know before getting started.

Let's start with the basics. Farming in DeFi is when you provide your crypto assets to protocols like Aave, Venus, or Lido and earn interest in return. It sounds simple, and in fact, it is. You deposit 1 ETH into a protocol, and every day or week, you receive a small income in tokens or the same ETH. Currently, ETH is trading around $2.02K, so even a small percentage can yield noticeable results.

Now, about looping—this is a more complex tool that many beginner users misunderstand. Looping is when you take a loan on already provided assets, re-deposit them, then take another loan on a larger amount and repeat this cycle several times. The essence is that each time your position grows, and the interest you earn also increases. Sounds attractive? Yes, but there’s a serious catch.

The main risk is liquidation—that’s what you need to remember. If the price of your asset drops and you used looping with a high Loan-to-Value (LTV) (Loan-to-Value), the protocol can forcibly sell your assets to repay the loan. This happens quickly and painfully. I’ve seen people lose significant money because of this.

For those just starting out, here’s an honest piece of advice. Forget about looping for now. Focus on simple farming in reliable protocols. Venus on BSC works well with ETH and SOL. Aave on Polygon or Ethereum is a classic option. Lido for staking ETH. Marinade for SOL (currently SOL is around $80.52). Start with small amounts, maybe Rp10,000-50,000 per week for ETH or Rp10,000-40,000 for SOL.

What’s next? Just provide your assets without loans. Yes, the returns will be modest, but you’ll avoid the risk of liquidation. After a month or two, evaluate how much you’ve earned and whether it’s worth it. If you’re satisfied with the results, you can start experimenting further.

Looping is a tool that requires understanding and experience. If you already know how protocols work and are willing to keep LTV below 50%, then you can try it. But for beginners, it’s risky. It’s better to first earn from simple farming, learn the market, and understand how prices behave. Then, if you want, you can gradually move on to more complex strategies.

In general, farming is a great way to earn passive income from crypto you already have. Start with reliable protocols, don’t rush into looping, and regularly check your positions. If you’re already on Gate, you can track all this conveniently there. Start small, learn through practice, and over time, you’ll understand which strategy works best for you.