DeFi (Decentralized Finance) is a new world of finance built on blockchain. There are no intermediaries like banks, and you can interact directly with various financial instruments. Sounds complicated? Let's figure out how you can earn from it.
Main ways to earn in DeFi
1. Staking
We've already discussed this. Lock your cryptocurrencies in special protocols and earn rewards. For example, by staking $ETH or $SOL.
2. Yield Farming
Provide your cryptocurrency to liquidity pools on decentralized exchanges (DEX) like Uniswap or PancakeSwap and earn interest in the form of new tokens. It's similar to earning interest on a bank deposit, but often with much higher returns.
3. Lending and Borrowing
You can lend your cryptocurrencies to other users for interest on DeFi platforms like Aave or Compound. You can also take out loans by providing your assets as collateral.
It's important to remember the risks!
DeFi is an innovative but risky area. Before you start earning, make sure to study:
Smart contract risks: There can be bugs in the protocol code.
Volatility: Cryptocurrency prices can change dramatically.
Impermanent Loss in farming.
Conclusion: DeFi opens up many opportunities for earning, but requires careful study and understanding of risks. Start small, understand each protocol, and don't invest more than you are willing to lose.
Which DeFi protocol seems most interesting to you? Share in the comments 👇
