DeFi is a new way of investing in crypto and I find it way better than traditional investment instruments. The reason why it's better is that it gives complete control of funds to the investors and we can make the changes anytime we want. Basically when we go for traditional investment options then we also lose control as money is managed by the financial institution or the banks whichever we use.
There are a few ways that we can follow to earn money by investing in decentralized financing. D Phi is something that gives more unity to people in the Crypto space. So in this post, I am going to share the different ways to earn through investing DeFi (decentralized financing).
Lending
Lending is one of the methods that we can follow to earn money in Crypto. We have so many platforms available as of now where this option is available and we just need to lend our Crypto to earn the rewards. The process is pretty much simple we need to choose the coin which is available for lending And in this way, we can earn. It is simply that we learned our digital holding and borrowers access those funds. These borrowers pay the fee for the same and this comes as earnings to the people who are lending their digital holdings.
Staking
this is another popular way that we can follow on decentralized finance where we can deposit our crypto tokens and earn certain rewards. The apr is already shown so we can choose if we are okay however this apr is not fixed in most cases but mostly it is better than the traditional investment. For example, if I deposit my sps token on the splinterlands website then I can earn approximately 28% of apr. Here also I have control over my funds and I can withdraw it anytime I want however there is some lock-in Applied by certain platforms.
Liquidity provider
We get this option in DEXs where we can provide liquidity. These decent lies exchanges create a pool where anyone can provide liquidity and earn rewards. Liquidity is very important for any exchange to get the orders filled on priority. More liquidity means more trading because people get to fill their orders without waiting. This liquidity can be provided in pairs for example BTC/USDT liquidity pool, and we can provide the liquidity for $1000 whereas I need to have BTC worth $500 and UST for the same value.
Maybe there are many more ways where we can park money to earn rewards in decentralized finance but these are three methods that I follow and I am comfortable with these. I know that this is not the end and probably there are many other ways that people must be following but bow areas are tried and tested where I'm able to earn a good amount of money. I also think that we should not forget the potential in the crypto market because if proper strategies are followed then we can earn a great number of returns provided we have long-term goals and patience to hold. Risk is everywhere but proper study and strategy can help us to minimize it and that is something recommended for all of us in crypto.
Thank you so much
Stay Safe