'Yield farming' is the terminology used in DeFi to describe the process of earning additional tokens for providing liquidity in some form. That might be staking a single token or staking a pair of tokens (an 'LP') somewhere and earning additional tokens as a reward for doing so.
You often need to 'claim' these additional tokens meaning you need to press a button to commence a transaction to claim the reward which will then be sent direct to your wallet. At that point you may decide to keep those tokens, sell them for something else or reinvest them ('compound') into the thing you were earning yield on.
Often when you are earning yield they will display your returns via an APR or an APY number. 'APR' means an Annual Percentage Rate whereby your returns are NOT compounded (reinvested) and 'APY' means Annual Percentage Yield whereby your returns ARE compounded (reinvested) back into your investment.
At Step we display both numbers so you have the most information available to you at any time, some other platforms only quote one or the other so it is important to understand that before making an investment decision. If you see an APY number you need to understand that number would only be achievable if you reinvested all of your yield for 1 year and prices and the rate stayed the exact same as today (highly unlikely). APRs are an indication of what you could earn over one year if prices and rates stayed the same and you never reinvested your yield, you can often take an approximation of APR by dividing the number by 365 to get a daily yield which is how most DeFi pros think about things.
Step is designed specifically for yield farmers to make their lives easier and provide the necessary information to make informed investment decisions. You can enter, manage, claim rewards and compound your yield farms from within Step, below are some of the options:
Most yield farms on Solana are on Raydium in the form of an LP token consisting of two assets. You need both of those assets staked in a liquidity pool which you then stake into a rewards/farming pool.
Start by adding both currencies into the LP by navigating to the Liquidity Pool page and pressing 'Supply'. This will add both of the coins you select into an 'LP Token' which is a token you then use to stake into a farm for rewards. If you do not stake it into a farm you earn no additional rewards.
The next step is staking your new LP tokens into a rewards pool. In the above case this is the STEP/USDC Fusion pool on the 'Fusion' tab on Raydium. After hitting 'Max' and 'Confirm' you get a transaction to approve in your wallet. Once you approve it you are now fully staked into a yield farm!
You will then see your yield farm displayed on your Step Dashboard, you are then able to Claim rewards directly from Step aswell as Compound your rewards by following the process on Step to reinvest them back into the LP on Raydium, all within Step.
There are other forms of yield farms including those from AMMs like Orca and Serum (Serum is deprecated and pools are closing). You can earn a yield on trading fees that people pay when transacting with via the AMM pool you have liquidity staked into.
When you navigate to the Liquidity Pools page in Step you will see a list of these pools and their APYs. You earn these fees passively by sitting your liquidity in these pools, however please note they can be highly variable.
You can see how to Deposit and Withdraw liquidity to one of these pools on this page.