Bullish on ETH and TAO? How I’m Yield Farming Both
Are you into farming? And no, I don’t mean growing tomatoes in the backyard.
I’m talking about putting crypto assets into liquidity pools and earning yield. More specifically, I’m talking about choosing what I want to own before deciding where to farm it.
That’s the idea behind my ETH and TAO yield farming experiment on MAXFi. I’m interested in both assets, and I’m exploring whether providing liquidity between them fits my goals better than pairing one of them with a stablecoin.
The displayed yield certainly caught my attention. But the more useful story is how I choose the pair, check its historical relationship, and test a position before adding more capital.
Why I’m Interested in Pairing ETH and TAO
Ethereum is an asset I want exposure to. I’m also interested in the AI theme behind Bittensor’s TAO. Those are my personal investment views, not predictions that either asset must appreciate.
Pairing them lets me explore a different kind of position from a crypto/stablecoin pool: one where both sides represent crypto assets I’m interested in accumulating.
In the video, I use WETH/TAO as shorthand for the position shown. WETH is wrapped ETH. On another chain, the exact representation of TAO also matters; a familiar ticker alone doesn’t establish what token or bridge you’re using.
Before entering any pool, I need to understand the actual assets involved—not just recognize their logos.
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My starting question is simple:
Would I still be comfortable holding either side of this pair if the position’s balance changed?
Why I’m Rethinking Crypto/Stablecoin Pairs
Earlier in my farming journey, I gave more attention to crypto/stablecoin pools with attractive yields. Over time, I became more conscious of the upside I could miss when the crypto asset rallied.
An AMM position changes its token mix as prices move. In a crypto/stablecoin pool, a rising crypto price can leave the position with more stablecoins and less of the appreciating token. That can suit a gradual profit-taking objective, but it can also conflict with a goal of maintaining more crypto exposure.
This is why I consider the purpose of the position before evaluating rates.
A crypto/crypto pair exposes me to two volatile assets. While this might align with my accumulation goals, it also poses a risk if both assets decline. Receiving fees doesn't necessarily make enduring a drawdown easier. However, my fundamental belief is that we are entering a bull run, and I need to invest in more correlated asset pairs that I trust to achieve greater price appreciation while still earning yields.
And farming two assets is different from holding fixed amounts of each. If one strongly outperforms the other, the LP’s changing composition still matters.
What Correlated Pairs Actually Tell Me
When I talk about correlated pairs, I’m looking at whether two assets have tended to move together over a particular period.
A correlation coefficient is generally expressed between −1 and +1. A reading closer to +1 indicates a stronger positive relationship in the observations being compared. It is not a percentage return, and it is not a probability that the assets will rise tomorrow.
In the video, I use DeFiBuddy to compare assets and focus on a 30-day view. I treat that as a starting point, not a permanent label attached to a pair.
The exact decimals in the transcript are unclear, so I’m leaving those values out here rather than presenting an uncertain number as fact. My takeaway from the screen was that TAO/ETH wasn’t as closely aligned as I would ideally prefer, which influenced my thinking about the range.
There’s another distinction worth making: two assets can move in the same direction while moving by very different amounts.
For example, if ETH rises 10% and TAO rises 30%, both are up in dollar terms, but the TAO/ETH ratio has changed substantially. That relative price is what matters to this liquidity position’s range.
Correlation helps me ask better questions. It doesn’t remove the need to examine the pair’s price ratio.
Inside My MAXFi Positions
Here are the snapshots discussed in the video. These are filming-time observations, not live quotes or current performance claims.
Detail | Main WETH/TAO position | Separate Base test |
Approximate position value | $200 | $5 |
Displayed annualized earning rate | Around 176–180% | Around 275% |
Range figure discussed | Around 10% | Around 12.7% |
Observation period stated | Not specified | Approximately two to three days |
Purpose | Explore farming two assets I want exposure to | Observe the alternative before considering more capital |
The range figures are repeated as shown or discussed in the video. They should not be interpreted as verified symmetrical bands of plus or minus those percentages.
I hadn’t committed to moving more capital into the Base position. I wanted to watch it for longer.
A $5 test can help me learn how a position behaves operationally, but it cannot establish how a larger allocation will perform over weeks or months. A brief window of attractive yield is a reason to investigate, not a completed investment case.
Want to explore the platform shown in this experiment? Explore MAXFi through my referral link. I may earn referral compensation when you use it, which helps support DADS DeFi Space. Take time to understand the pool and its risks before depositing.
Why Range Width Matters
Concentrated liquidity lets an LP allocate capital within a selected price interval. The position’s behavior depends on whether the pair’s current price stays inside that interval.
In standard Uniswap-style concentrated liquidity, an out-of-range position becomes single-sided and stops earning swap fees until it is active again. That describes the underlying LP mechanics; any management service’s rebalancing behavior must be evaluated separately. Source: Uniswap’s explanation of out-of-range positions.
A narrower range can concentrate capital more heavily near the trading price. A wider range gives the ratio more room to move, but it can dilute fee-earning concentration. Wider is not automatically better, and narrower is not automatically more profitable. Source: Uniswap’s discussion of full and wider ranges.
For my TAO/ETH experiment, the correlation check made me think about whether I needed more room for relative price movement. I’m looking for a range I can understand and manage—not simply the range that produces the biggest displayed rate.
A High Displayed Yield Is Not the Same as a Profitable Position
The 176–180% figure on my main position and the roughly 275% figure on the small test are annualized dashboard readings from filming.
Neither means I earned that percentage on my deposit. Neither proves the rate will last a year.
I also avoid treating APR and APY as interchangeable labels. Unless the dashboard’s calculation is confirmed, “displayed annualized earning rate” is the more accurate wording for these examples.
To judge an LP, I want to consider the whole position: its current value, fees, any money added or removed, and relevant costs. Then I want to compare that result with what would have happened if I had simply held the starting assets.
Impermanent loss describes the effect of the LP’s changing asset mix relative to holding. Fees may offset that difference, but they don’t guarantee it. A position can earn fees and still lose money in dollar terms—or rise in dollar terms while trailing the holding alternative. Further reading: Uniswap on impermanent loss.
That’s why I care about what I’m accumulating and how the entire position performs.
Five Questions I Want Answered Before Adding More
Do I want both assets? An attractive rate won’t make me comfortable owning a token I don’t understand.
What is the actual token representation? The chain, contract, wrapper, and bridge can introduce risks beyond the price of the underlying asset.
How does the pair behave? I want to examine relative price movement as well as historical correlation.
Does the range fit the experiment? I need to understand what happens if the position leaves its range and how any management settings affect it.
Is the total result worth the risk? Fees are one part of the result. Asset values, costs, and the alternative of simply holding belong in the comparison too.
Those questions are useful whether I’m looking at ETH/TAO or another crypto pair. They keep the decision connected to a purpose.
Frequently Asked Questions
Is ETH/TAO yield farming the same as staking?
No. This article discusses providing liquidity between two assets. Staking generally involves committing assets to a staking mechanism, often related to network security. The word “yield” can describe returns from different activities with different risks.
Are ETH and TAO always highly correlated?
No. Correlation depends on the period, data, and calculation used, and it can change. Sharing a broader crypto market trend does not mean their price ratio will stay stable.
Can correlated pairs still experience impermanent loss?
Yes. Correlation does not eliminate changes in relative price. Both assets can also decline together, reducing the position’s dollar value.
Does a 180% displayed rate mean I will earn 180%?
No. It is an annualized reading at a particular moment. The observation period, fee activity, range status, position value, and calculation method all matter. It is not a guaranteed future return.
Pair First. APR Second.
My interest in ETH/TAO starts with the assets. The yield is part of the evaluation, but it isn’t the whole reason for being there.
I’m using these positions to explore an approach, observe how it behaves, and decide what deserves more capital. I’m not treating a short test as proof that I’ve found the perfect pool.
If you’re interested in the screen-by-screen example, watch the video embedded above. For more practical crypto and DeFi education, explore DADS DeFi Space.
What two crypto assets would you consider farming together—and what would make you change your mind?
Process over prediction. Survive first, compound second.
Keep Learning With DADS DeFi Space
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Optional Tools and Channel Support
If you are independently researching exchanges, you can also use my LBank referral or BloFin referral. These are optional resources, not requirements for following this article. Check availability, terms, and risks for your location before using any service.
Affiliate disclosure: I may receive compensation when you use my referral links, including MAXFi and the exchange links above. This helps support our educational work. A referral relationship is not a guarantee of a platform’s safety or performance.
If this article helped you, share it with someone learning about liquidity pools—and leave a comment with the pair you would like me to explore next.
Disclaimer
This article is for educational and informational purposes only. It reflects my personal experience and opinions and is not financial, investment, legal, or tax advice, or a recommendation to buy, sell, or provide liquidity for any asset. Do your own research and consider your circumstances before making financial decisions.
Cryptocurrency, DeFi, liquidity pools, and yield farming involve substantial risk, including price volatility, impermanent loss, smart-contract exploits, bridge or wrapped-token failures, liquidity limitations, and platform failure. You could lose some or all of the funds you commit. Only use money you can afford to lose; do not put money needed for bills, debt payments, or emergencies at risk.
All balances, yields, range figures, and results discussed are snapshots from the time of filming. Displayed annualized rates are variable estimates, not guaranteed returns or a record of realized yearly performance. Past results do not guarantee future outcomes. Earning fees does not guarantee a profit, and liquidity provision can underperform simply holding the assets.
I hold positions discussed in this article and have a referral relationship with MAXFi. Other links may also be affiliate or referral links through which I may receive compensation. Always evaluate the assets, platform, costs, and risks independently.
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