Yield farming is putting crypto assets to work and generating the most returns possible on those assets. A yield farmer (person participating in farming techniques within DeFi ecosystem) might move assets around within various DeFi projects offering returns (such as Compound, Synthetix, Uniswap, Yearn and so on) constantly chasing whichever pool and opportunity is offering the best APY (annual percentage yield) week to week or even day-to-day.
What makes yield farming gains so special are tokenized incentives. Tokenized incentive is when a new or existing DeFi project incentivizes user activity and proposes any yield farmer their own token in addition to the usual APY return. Incentivized yield farming rapidly grown in popularity and TVL in 2020, offering farmers implied yearly returns in thousands percentages for participating in risky DeFi pools. The market has normalized since then as of late 2020 with less risky projects in the space.