The decentralized finance (DeFi) universe continues to evolve, offering lucrative opportunities for those willing to explore advanced strategies. You can increase your earnings by utilizing lending protocols, trading derivatives, and taking advantage of arbitrage opportunities.
In this article, we will present you with the main strategies for making the most of the potential of DeFi in 2025, especially if you want to go beyond the basics.
1. Loan Protocols: Make your idle assets profitable
DeFi lending protocols allow users to lend or borrow digital assets without the need for intermediaries. Platforms such as Aave, Compound, and MakerDAO directly connect lenders and borrowers, offering competitive rates.
This is perhaps one of the most important innovations that decentralized finance brings to the financial world: not needing an intermediary (such as a bank or stockbroker) to take out a loan reduces costs, necessary steps and even increases security - since these transactions usually happen based on smart contracts.
How does it work?
You can deposit your cryptocurrencies as collateral and earn interest on the borrowed assets. Alternatively, you can borrow against your deposited assets to fund other operations.Advantages of lending cryptocurrencies:
Earn passive interest on idle assets;
Diversify your sources of income;
Take advantage of opportunities without selling your cryptos.
Risks to consider:
The market can be volatile, which affects the amounts deposited as collateral. In addition, it is important to choose well-established protocols and carefully review smart contracts to avoid security flaws.
Probably the most important risk to keep an eye on when it comes to lending protocols is the security of the platform. Yes, not having an intermediary reduces costs and steps, but if there is no security in the transaction (for example in the custody of the collateral, in the rules involved and other points of the kind), all the advantages fall apart.
2. Derivatives in DeFi: Sophisticated Hedging and Speculation
Decentralized derivatives are financial instruments that allow you to speculate on the price of assets or hedge against market risks. These instruments include futures contracts, swaps, and options.
Specifically regarding hedging, we would say that the main idea is to provide an additional means of security for periods of recession. You know that old story about finding an asset that everyone runs to when risk increases? So, the idea of hedging is to provide this type of capacity to some asset.
How do they work?
On platforms such as dYdX, Synthetix and UMA, it is possible to create financial contracts based on the performance of assets such as cryptocurrencies, commodities or indices.Main uses of derivatives:
Hedge: Protect yourself against adverse price fluctuations;
Speculation: Profit from price movements without needing to own the underlying asset;
Leveraged Exposure: Expand your profit (and risk) potential.
Why is it interesting?
The DeFi derivatives market is transparent and accessible, allowing small investors to participate in complex strategies previously reserved for large financial institutions.
This type of strategy, which is based on closing operations with financial instruments that look at specific assets (without having to buy the asset itself), is quite popular in the traditional financial market. The big news when this is inserted into the crypto universe is that assets are now also viewed in relation to their non-financial potential.
When someone buys a derivative that deals with a stock, for example, they are expecting something related to their profit or future expectations to change so that they can make a profit. When we talk about crypto, there are several other points to be observed, such as the adoption of a project, possible partnerships and even the power of the community that it involves.
Therefore, it is worth noting: the possibilities are much wider, but the care needed to avoid falling for scams is just as great.
3. Arbitrage: Exploiting price differences between platforms
Arbitrage is a strategy that involves exploiting price differences for the same asset on different exchanges or DeFi protocols. It also exists in the traditional financial market, but the difference is that, with cryptos, we are talking about a market that never sleeps.
Types of arbitrage in DeFi:
Inter-exchange arbitrage (DEX and CEX): Buying on an exchange where the price is lower and selling where it is higher;
Triangular arbitrage: Trading between three different currency pairs to profit from small price discrepancies;
Cross-chain arbitrage: Taking advantage of differences in asset prices on different blockchains;
Useful tools for arbitration:
Arbitrage Bots: Automating Fast Trades to Maximize Profits;
Monitoring platforms: Services like Nansen and DeFi Pulse help identify opportunities.
Challenges and care:
Success in arbitrage relies on low transaction fees and speed. Choose affordable blockchains like Polygon or Binance Smart Chain to avoid gas fees eating into your profits.
Arbitrage, ultimately, is the search for equal assets with different prices in different places and, as you have seen, there can be several strategies for you to execute orders and transform these price differentials into gains for your portfolio.
Once again, we recommend caution and research regarding the platforms you are going to use, especially those that involve bots, because unfortunately there are many scams that disguise themselves as great opportunities with them.
4. Bonus: by combining strategies, the possibilities increase!
First, we’ll introduce you to three advanced strategies. But what if you could combine them? That’s exactly what we’re going to talk about now!
Combination of loans and arbitrage
The goal here is to make a profit from the price differential of the same asset in different places with money that you don't have. But, of course, remember to always check before entering into such a transaction whether what you will earn from arbitrage compensates for the costs of the loan.
Using derivatives for arbitrage hedging
When arbitraging, use futures contracts to protect your profits against price fluctuations. This way, you are reasonably prepared for both scenarios: if what you expected happens, you win, and if something in the opposite direction happens, you reduce the damage through hedging.
Exploring leveraged liquidity pools
On platforms like Balancer and Curve, provide liquidity to specialized pools that offer higher fees.
We hadn’t mentioned this before, but “providing liquidity” is the equivalent of “leaving your money in the bank in some low-risk investment.” Whoever provides liquidity is allowing a platform to use its resources to expand possibilities on the other end – the one that borrows – and, at the end of the day, you are compensated for this.
When we look at liquidity in a leveraged scenario, we would say that the gains can then be amplified. Of course, it is also necessary to keep an eye on the risks of each operation, because they can also be greater.
Risks and how to mitigate them
The DeFi market offers great opportunities, but it also carries significant risks. Don’t forget to look for ways to protect your assets and implement strategies that seem interesting to you in the safest way possible.
Here are four tips for you who want to execute the advanced strategies that we present in this article but without losing security in your operations:
Choose reliable protocols: Prioritize audited platforms with a good reputation in the market;
Manage your exposure: Never invest more than you can afford to lose, especially in leveraged strategies;
Continuously monitor: Keep an eye on market changes and yield rates;
Diversify: Don’t concentrate your assets in a single protocol or strategy.
These tips won't eliminate the risk, but they will reduce it substantially. When it comes to crypto, security is the first step for anyone who wants to move forward without any scares.
Opportunities for 2025
As the DeFi ecosystem grows, new tools and platforms are emerging to facilitate access to advanced strategies. Technologies such as artificial intelligence, improved user interfaces, and cross-blockchain interoperability solutions promise to make DeFi even more accessible.
Given the regulatory advances being discussed around the world, now is a great time to delve deeper, study and experiment with strategies that can transform the way you invest. With the right knowledge, you will be prepared to take advantage of the best that 2025 has to offer in the world of decentralized finance.
After all, DeFi isn’t just the future of finance – it’s a revolution in progress. Join it!
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