Digital currencies have proven to be more reliable
than traditional fiat during the pandemic. That’s why many people are seeking
the best ways to cash out real money digitally.
Do you want to earn lots of money from digital
currencies but don’t know how to go about it? The best way to accumulate
digital wealth in the crypto world is through DeFi.
What
Is DeFi?
DeFi, also known as decentralized
finance, is financial software built on the blockchain. It refers to digital
assets and financial smart contracts, protocols, and decentralized applications
(DApps) built on Ethereum.
DeFi eliminates paperwork and go-betweens by replacing
them with smart contracts, which means whatever you do with your money can
never be altered.
Because of the decentralized nature, it gives users
the power to manage their financial decisions, such as taking loans, opening
accounts, and trading without the help or permission of any government body or
middle man.
How
Can You Earn with DeFi?
DeFi
offers products and services such as lending, decentralized exchange, assets (tokenized
physical asset), betting, insurances, etc. it allows its users to earn passive
income and put their money to use without restrictions.
The three ways to earn
with DeFi
include;
1. Compound
Compound
is a smart contract that allows you to borrow your money and earn interest over
the period. It’s similar to conventional banks and other money-lending
organizations, but the interest rate is higher on DeFi.
Immediately you deposit
into the Compound smart contract, your interest starts compounding. Also, the
loans are secured to prevent unnecessary loss.
Before a borrower can
take loans, there must have been a deposited amount of token in compound. If
the borrower is unable to pay, his/her collateral is sold to cover the debt.
2. Decentralized Exchange
This
is a platform that does not require a governing body or a centralized authority
to trade. Unlike platforms like with various assets, decentralized exchanges
trade with cryptocurrencies exclusively.
It
is a smart way to earn with DeFi since it allows you to trade with cryptocurrency with minimal regulations and control.
3. Investment
Investing
is another passive way to earn on DeFi. It is common knowledge never to invest
more than you are willing to lose, but it might go a long way to repeat it.
You
can invest by converting your deposited USD/EUR to ETH and watch how your
decentralized currency grows.
DeFi
works pretty much the same way other investment platforms do. The significant difference
is the yield and the absence of a presiding authority dictating how you use your
money.
Conclusion
With the surge in fear of currencies losing value,
many people are beginning to view cryptocurrency as a way to invest their money
and diversify their portfolio. However, in the areas where many centralized
platforms have failed, DeFi promises greener pastures.
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