How to make money from Decentralized finance (DEFI)? 5 methods earn passive income
Decentralized finance (DEFI) is the successful implementation of blockchain applications and can be used as a promising substitute for traditional finance. To put it plainly, Defi is a collective name that is used to operate various financial industry products and services that are used to decentralize blockchain technology.
DEFI Application Software (DAPP) is committed to removing the intermediaries in financial investment, and has been advocated through other financial companies such as banks over the years. This method vigorously implements a blockchain -based trust mechanism to achieve this. This system allows safe points to trading (P2P) transactions without paying commission to online banking.
More and more decentralized financial industry use cases have created an effective way for DEFI investors to gain money. In order to cause the Internet to make money, investors need to use his DEFI property as a network resources to determine transactions and perform the process of performing a consensus mechanism through the shareholding (POS) consensus mechanism.
Let ’s learn how to use decentralized finance (DEFI) to obtain passive income.
How to make money from DEFI?
The probability of encryption space is very high, and a new probability will occur every day. In the days of Defi for more than 3 years, it has already developed and even the method of making money for novices. Users can leave his encryption assets to give decentralized agreements.
In return, they can get savings income. Recently, this is an innovative way to get funds in data encryption customers. Frankly speaking, you can get a certain amount of net inflow in removal. Isn't this very special?
What is the way to make passive income by DEFI?
One of the hottest applications of blockchain applications is decentralized financial industry. For some people who prepare for the global processing of cryptocurrencies but have not yet prepared a huge project investment -especially in the current market -it is likely to be a good compromise solution to get Internet earning money based on DEFI.
There are many novice entry methods. From pledge digital currency to liquidity service providers or make profit, agriculture and animal husbandry, only a few. Is this professional term listen to Latin? do not worry.
We will explore all the methods to make money by making money one by one.
Method 1: Pickling loan: deposit for the APY in cryptocurrencies
One of the most intuitive ways to apply DEFI to make money on the Internet is to deposit currencies into accounts to get loan interest. You are likely to seem to understand, because he is similar to laws and regulations on bank card accounts and obtain loan interest. However, this period of time is very low, if it is not worthy. Compared with Gaojie financial institutions, it is estimated that the opportunity to apply DEFI to get back is estimated to be much higher.
Many DEFI service platforms call this whole process "pledge loan", and the interest obtained can occur in the way of any currency encouraged by the same category of the same category of pledge loans. When you pledge your crypto assets, you will become an Internet transaction authentication or connection point. This will be critical to the functions and security factor of the network, which is why pledged loans get economic development encouragement to do so again.
How should we gradually? The first thing you should do is to buy cryptocurrencies by artist agent or cryptocurrency exchanges like Binance or Coinbase. Once you put it in your wallet, you can deposit your currency into an agreement and service platform, which also pays your annualized return on your payment (APY). For example, Coinbase gives 5%APY, and APY can reach 12%or more in other platforms such as AQRU.
You can apply a lot of currency and tokens to carry out pledge loans, but we must remember that most of the DEFI service platforms operate on Ethereum blockchain technology, which means that it generally refuses to accept BTC (BTC). It is more suitable for investors who use this DEFI method to obtain Internet earning money for the so -called "cryptocurrency HODLER", that is, looking forward to the currency stored to obtain regular interest.
There is a series of service platforms to choose from, and each service platform also supports different types of currency, pledge loan period and it -more important -loan interest rate.
Method 2: DEFI borrowing
Borrowing is another approval method for obtaining passive income based on DEFI, and there are many service platforms for this type of data encrypted loan contract.
The online loan platform pays the user APY to lock its property in the blockchain smart contract. Subsequently, this currency was applied by the lender, and the lender accrued the interest, and some of them returned to the lender. For example, compoundfinance is given 8.19%of APY to the loan DAI. Because the entire borrowing process is managed by the blockchain intelligent contract, the lender will not have the risk of debt. Therefore, you need to obtain your pledged loan property from beginning to end.
Similar to our just explanation of pledge loans, everyone can deposit currency in accounts for a period of time to obtain the Internet from DEFI borrowings to make money. As you may already guess, when you borrow the cryptocurrency for a service platform, you are leased it to cryptocurrency lender. In return, you will get hobbies. Generally, the blockchain intelligent contract shall be calculated according to the total number of property you locks.
Another advantage of DEFI borrowing is that because the entire borrowing process must pass through the blockchain smart contract, the risk of destruction of the lender is almost zero. As a result, your property should be very safe from beginning to end. Most of the DEFI online loan platforms also allow you to get your cryptocurrency anytime, anywhere without paying for withdrawal.
Method 3: High -yielding agriculture and animal husbandry
Profit is another form of increased cryptocurrency. At the same time, it placed it to obtain loan interest or other types of rewards.
To put it simply, users on the DEFI platform can put his assets into the turnover capital pool. Once this currency is locked according to the blockchain intelligent contract in the decentralized application software (DAPP), customers can obtain cost or loan interest to allow property to use loans and sale on the Internet or use.
Seemingly understand? nature. It is also very similar to depositing money into a bank account, and then use it to loan -related business, you will get a fixed proportion interest. Similarly, the profit farm is conducive to ensuring the high liquidity of all DEFI ecosystems.
People who borrow currencies from the DEFI service platform are often called "profitable farmers", and they often change the middle of the funds pool as a greater countermeasure.
Like any way of investing in projects, a corresponding financial due to the application of your solution application is vital. Because not only the cryptocurrencies have a lot of ups and downs, but also everyone knows that immoral developers will also lead to cheating. They suddenly withdrawn from the new project and fled the investors' money ("blanket pull").
When you do LP in the DEX in UNISWAP, you will receive the share currency of your pool. Then lock these currencies to a profitable farm. This large -profit farm is essentially the DEFI agreement, which can use a large number of the same currency or different types of tokens to reward you. This means that when your agreed property gets part of the relevant cost in Uniswap, your LP currency can be obtained.
When profitable, it is essential to investigate the financial due to the platform to ensure that it is meticulous, and its developers inadvertently "involve" the LP currency and use them to obtain liquidity from the DEX pool. Select a service platform with a strong reputation and its blockchain smart contracts that have been mature in audit.
Method 4: Become a liquidity service provider
Become a liquidity service provider (LP) is another way to obtain passive income with your data cryptocurrency.
However, it is different from the mortgage or profit agriculture and animal husbandry that provides funding support for data encryption or borrowing of data encryption. Liquid service providers have different types of effects -they use to ensure that at the decentralized exchange (DEX) Currency swaps on more efficient and faster
Liquidity service providers are also known as business promoters, and they are compensated by their transaction fees for transaction transactions. Don't worry, you don't need to actively carry out the whole process of everything.
For centralized exchanges, such as Pancakeswap, Uniswap, and Yearnfinance, etc., fully automatically fill in order information and processing transactions.
The interchange between currency pairs such as Uniswap and Sushiswap is used for centralized exchanges such as ETH and USDT. This type of liquidity comes from the pool currency belonging to the liquidity service provider (LP), that is, a general DEFI customer, and he put his currency into the blockchain smart contract related to the pool. If you do this, you will get 0.3%from the entire period of the DEX of Uniswap, which is proportional to your pool market share. The greater the transaction transaction in the pool, the more profits you get.
LPING is not always ensuring profitability. When one of the prices of gathering currency changes significantly, you may actually lose money based on a process called impermanence loss (IL). However, there are some ways to alleviate such things, what choices include uncertainty and high -liquidity pools, such as WBTC/ETH.
Like the other forms of the Internet earning money, there is also a certain degree of risk, especially in the current stock market bear market. However, you can not only analyze before capital investment, but also choose to contribute to the property in the liquidity pool with high safety coefficients.
Method 5: Liquidity mining
On the important method page of we can get the Internet to make money from the decentralized financial industry, the ultimate one is liquidity mining. Similarly, cryptocurrency holders borrowed his property to a centralized exchange and received benefits. However, the difference is that liquidity mining usually receives rewards in the native tokens of the blockchain technology they use, and they can also obtain the type of governance to the tokens and then participate in the types of special new projects to the greatest extent. Like all liquidity pools, service providers receive rewards based on the total number of liquidity pools they provide.
What are the differences between loans, profitable agriculture and animal husbandry and liquidity mining again?
Pickling loan is a form of rewarding to obtain some cryptocurrencies. In the blockchain technology based on the certificate of equity (POS) algorithm, the pledged loan as a connection point authenticator assists to ensure the accuracy of trading on the network. It also ensures the reliability and liquidity on the platform.
Profit agriculture is a service item given by the decentralized exchange (DEX), and is committed to giving the currency liquidity for health awareness to both parties. Through various ways to make money by Defi, users can contribute to a common capital pool (called liquidity pool) and receive rewards for allowing their assets to operate through some websites.
However, although profitable agriculture is a kind of idea to get as high as possible, the core of liquidity excavation is to maintain the integrity of the Internet. At the same time, consumers contribute to sharing the liquidity pool.
The risk of making money from DEFI
Each way of project investment is accompanied by a certain degree of risk, and it is generally accompanied by profit opportunities that can make money. In the Defi profit method, one of the biggest risks includes scamming, hackers invading, and its defective or excessive agreed blockchain smart contracts.
Because the profit of Defi is related to the total number of gold coins obtained, the price adjustment of cryptocurrencies may cause damage during the stock market bear market. Under such circumstances, investors focus on the ownership of currency until the price quotes are soaring at the same time providing unfinished profit.
In addition, the risk of DEFI investment proposal may also be the intention of mining software users. Therefore, the authenticity of service providers based on historical time spending is important.
How do you make a profit on DEFI?
To obtain income, you should pledge loans or raise funds cryptocurrencies or currencies from the DEFI service platform, and obtain income from loan interest or transaction fees.
How much does DEFI investment cost?
Everyone has not encountered accurate data in the process of scientific research, but everyone agrees that the greater you have spent on DEFI, the more profitable you are.
What are the best ways to invest in DEFI projects?
The best way is to damage the least risk, but people who do not explore will not be profitable. Based on your ability, the selection is borrowing, pledge, profitable agriculture and animal husbandry, or becoming a liquidity service provider.
How much money do you have been making?
This situation does not answer uniformly, because the interest rates, costs and APY standards of all investment methods are not the same. But your additional Internet earning money will inevitably be very large.
The best agreement of Defi profitability
I have mentioned some of them in the article. They must be AAVE, Compound, Uniswap, Synthetics, Yearn, Balancer, Maker, Sushiswap, Kybernetwork, ProjectSerum.
There are many ways to make money from DEFI, and various ways have advantages and disadvantages. Fully considering the current situation of the cryptocurrency sales market, choosing a way to make money for you may be an effective measure.
But as mentioned above, we must consider the method that is more suitable for everyone, and do not invest beyond the funds that you can withstand risk losses. Remind that the method of making money in Defi introduced in this article is not investment suggestions. Before investing, you must be cautious and reasonable to avoid fraud and risk.