3 Ways to Earn as DeFi Rules the Crypto World

 

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.