25 July 2022
2 min read
The emergence of Blockchain and Cryptocurrency had a very positive impact on people who were curious about the world of investments online. But these assets had a very restricted use because of the lack of proper technology that could help them transfer those assets. Then came DeFi, short for Decentralized Finance, which offered many avenues for investors to monetise their assets efficiently.
Users can now use various passive income opportunities with DeFi by employing their idle cryptocurrencies (and other digital assets) on lending protocols, liquidity pools, and decentralized exchanges. These strategies have proved to be quite successful in generating high DeFi interest Rates.
Below are a few strategies that can help you diversify your portfolio AND spawn higher DeFi Interest Rates.
1. DeFi Lending
Defi lending is a very interesting concept. The lending platforms enable users to list their crypto coins for lending purposes. Why does it stand out? It stands out because such platforms can provide crypto loans without the need for any middlemen.
DeFi lending has proved to be more efficient than traditional lending techniques because it supports transparency, and accessibility negating the need for intermediaries. As a long-term investor, you can use DeFi Lending at your disposal and earn high-interest rates as it offers margin trading options to the users.
2. Yield Farming
Yield Farming has turned many eyes ever since its launch. Token holders who practise yield farming can maximise their earnings using different DeFi systems. But how does it work? Yield farmers get paid in cryptocurrency in exchange for the liquidity they supply to various token pairs.
Although Yield Farming can be a bit risky because of the market instability and volatility, with proper research and analytics, one can gain high benefits from this phenomenon.
3. Liquidity Mining
And last, liquidity mining. Again, crypto owners get rewards for lending their assets to decentralised exchanges in this case. Liquidity miners typically receive compensation in the native token of the blockchain. They also have the opportunity to earn governance tokens, maximising the level of involvement they can have with a given project. Similar to any other liquidity pool, providers get paid according to the portion of the liquidity pool they contributed to.
DeFi lending protocols have created great avenues for investors to produce high interest through their assets. But, as an investor, it is your responsibility to monetise those avenues. So, read the market trends as thoroughly as possible and make informed decisions before exploring any new investment strategy.