Earning Through DeFi

How I can earn through Defi??

To make it simple we have sorted it according to risk and rewards with just one thing in mind:

Before you go any further, we are excited to announce that we are running a community to help people understand crypto basics and to be able to capitalise it in next 5 minutes . Join our server by?clicking here. Don’t be afraid if you’re not too familiar with discord yet. We are all in this together.

1. Lending?( Low Risk, Low Returns )?:

In layman terms earn by lending your tokens - and get an interest in return. But the question is how is it any different from a bank?

Lending in DeFi over TradFi has:

???Higher APY?( Annual Percentage Yield )?- As there are no middlemen involved.

???Privacy?- Your tokens are secure with yourself and only you hold their private key.

????Collateralized?- Since there is no bank every loan is given against something (Collateral ) and it’s dependent entirely on code in most cases.

AAVE,?COMPOUND, and?YEARN FINANCE?are some of the Lending Defi Apps you can start with! Here’s a tutorial for AAVE you can start with right away:

2.?By Providing Liquidity ( High Risk, High Rewards ):

Let’s start with understanding a few concepts:

The concept of liquidity

Let’s say you have some Bitcoin and you want to exchange ???? it for Ethereum. How do you do it? You place a bid and wait for another person to make an offer who is willing to exchange some of his/here Ethereum for Bitcoin.

But with the rapid pace ???? that the crypto market is growing, always waiting for someone to complete your trade is not a scalable solution, right? So how do we solve this?

Glad you asked.

The answer is always having enough Bitcoin and Ethereum in the pool for someone to come and exchange their tokens, and the people who are supplying these tokens are called?liquidity providers???

They are doing this because every time there is a trade that happens using the pool, they earn a share of the trading fees.

Now if you are holding some Bitcoin and Ethereum, even you can start earning some interest by providing liquidity to any pool.

But are there any risks involved? Yes, there are.

The risk that you will take here is known as?“Impermanent loss”.

Let’s suppose you earn 500 dollars by providing liquidity in Bitcoin & Ethereum but you could have earned 600 dollars if you had just held these tokens. It’s a loss, right?

Value of money (Earned ) < Value of Token (Holding ) is termed as impermanent loss?

3.?Incentives & Airdrops ( Need to keep your eyes open ):

What are these incentives?

Well,?in simple terms traditional companies rely on marketing gimmicks to drive adoption of their product while web 3 companies rely on distributing their coins as an incentive to customers if they perform a certain task.

For example,

“Avalanche?provided tokens to its developers who build decentralised apps on the avalanche blockchain”

Another way to incentivize users is through airdrops.?

AirDrops?is a way for companies to acquire customers in the early days by dropping the coins on completing certain tasks or sometimes randomly. Do check out this website for the latest airdrops -?airdrops.io

To give you a perspective, here’s some FREE MONEY you could have got if you had used these protocols:??????

That is 35k USD worth of free money, which is close to ?30 Lacs.

Diving Deep in DeFi

The total value locked in DeFI protocols as a whole, at the time of writing, stands at 229 billion dollars, up by 10x in 2021 alone.

Source: defillama.com

To give you further readings, if you’d like, here are some more common DeFi protocols you can check out:

1. UniSwap: A decentralized exchange (DEX) used for exchanging tokens
2. MakerDAO: A protocol for generating a decentralized stable coin, DAI, which can be used by anyone, anywhere.
3. AAVE:?Lend and Borrow assets without banks.
4. COMPOUND: An algorithmic, autonomous interest rate protocol built for developers.
5. TokenSets: Asset management in the DeFi world, invest in a curated basket of tokens in a single click.