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> raise $20m on their own through a yield farm

What is a yield farm and how is is structured?

That’s a very googleable question, but in a nutshell it is a series of smart contracts that reward token holders for holding a staking a token.

It incentivizes investors to buy and hold instead attempting to trade the asset and create unwanted volatility.

It can also raise funds through a small fee structure that can be applied on deposit of non-native token pools.

OK, so it's a shadow bank: lend long, into other people's short term borrowing.

So it must have extremely high interest rates? Which raises the question, who's borrowing all this and how's it collateralized?

I think you are starting with an incorrect assumption and trying to work your way backwards from it.

If you want more mature examples of this structure in the wild I would start with pancakeswap ($4b market cap) and apeswap ($500m market cap).