How to Earn Money with DeFi — An Investment Guide
The crypto space has many myths about the DeFi (Decentralized Finance) ecosystem and its operational values. You may believe them to be true until you experience the full potential of DeFi as an investor. In reality, DeFi investment offers many benefits as a Return on Investment. This is why the question ‘How to Earn Money with DeFi’ remains topper than these myths.
So, what would be your smart move as an investor?
Will you believe the myths and stand behind a successful business?
Or will you look for the best investment opportunities in DeFi?
If you prefer investment options, this blog is an investment guide for you. Here I have covered the best ways to make money with DeFi. Whether it is a small investment or a large investment, this blog covers everything you need. The active and passive income possibilities will help you decide on the right DeFi investment.
So without further delay, let us get into the blog with some fundamentals…
A Short Overview of DeFi
DeFi came up with the concept of establishing completely transparent financial practices that give users control over their transactions and crypto assets. This decentralized finance ecosystem authenticates direct dealings while ensuring security, privacy, and control during transactions.
From its origin, DeFi has been contributing to the financial sectors including cryptocurrencies, digital banking services, etc significantly. But now with consistent growth and productivity, they are the powering house to many industries.
Indeed, if you are wondering how to make money with DeFi, then cryptocurrency-based investments seem ideal. Crypto businesses could transform your investment into profits with steady growth and unique investment strategies. So are you ready to explore….
How to Earn Money with DeFi?
Investors can earn money from DeFi in two possible ways. They are,
👉 Active income generation
👉 Passive income generation
First, let me begin with the…
Active Income Generation
Active income is the direct earning from the business and services. It may be a salary, fees, and commissions. Decentralized finance has many opportunities to make money with DeFi business actively. Here are the top-notch DeFi businesses for active income generation.
Decentralized Exchange (DEX)DeFi Lending and BorrowingDeFi Payment GatewayDeFi Yield FarmingDeFi StakingDeFi InsuranceDEX Aggregator ServicesDeFi WalletNFT Marketplace with DeFi IntegrationLaunchpad Services
Come! Let us have a glance through each DeFi business.
1. Decentralized Exchange (DEX)
Decentralized Exchange is a smart contract-powered trading platform that facilitates direct trading between buyer and seller without an intermediary role. Crypto trading is the major play of a DEX platform. But add-on modules integration makes Decentralized Exchange Development an ideal way of drawing maximum profits from investment. Forbes’s study claims that decentralized exchange is a 17 billion dollar business.
So as an investor, you might have a question,
How do decentralized exchanges make money?
Here comes the answer…
5 Top Decentralized Exchanges
Here are the top DEX platforms that have a better user base and revenue potential.
PancakeSwapUniswapCurve FinancedYdXJupiter
2. DeFi Lending and Borrowing
DeFi lending and borrowing platform helps cryptocurrency traders expand their trading potential through crypto loans providing some collateral for the loan. The lending platform approves loans and charges interest from the borrower. Generally, the funds used for lending are assets staked by other investors. Therefore, the chances of multiplying the investment into profits are higher here. Thus, you can earn money with DeFi lending and borrowing platforms in a decent range.
5 Top DeFi Lending and Borrowing Platforms
Here are the top 5 DeFi lending and borrowing platforms for your reference.
AAVECurve FinanceCompoundVenus ProtocolYearn Finance
3. DeFi Payment Gateway
DeFi payment gateway offers crypto payment processing between traders, merchants, and decentralized applications in a secure and decentralized environment. The payment processor executes trading with the help of a dedicated smart contract. You can collaborate with diverse vendors through interoperability and merchant integration possibilities. Through add-on services, you could boost up the way to make money with DeFi Payment Gateway Development. Since crypto transactions are higher these days, the DeFi payment gateway business is a future-proof investment.
5 Top DeFi Payment Gateways
Here are the Top 5 DeFi payment gateways making millions of revenue.
NowPaymentsCoinPaymentsBitPayCoinGateCoinbase Commerce
4. DeFi Yield Farming
DeFi yield farming is often related to DeFi staking services. However, they differ in terms of associated risks and profit percentage. Unlike DeFi staking, this yield farming platform locks assets to provide liquidity to cross-chain decentralized applications. Therefore, you can earn from DeFi yield farming with great profits and at higher risks. Connecting AMM features with this business lets you earn money with DeFi yield farming effectively.
5 Top DeFi Yield Farming Platforms
Here are the top 5 DeFi yield farming platforms preferred for cross-chain liquidity.
BifrostAAVEPancakeSwapSushiSwapUniswap
5. DeFi Staking
Many of us know how to earn money with DeFi staking services as an asset holder or small-scale investor. But this is a passive way to make money with DeFi which I will discuss later in this blog. DeFi Staking Platform Development offers numerous benefits and draws decent income. For instance, you can enhance the platform liquidity with the staked assets. By establishing interconnectivity with dApps, you can earn from DeFi staking services a great income. Here the risk of investment is very low compared to other investments.
5 Top DeFi Staking Platforms
Here are the top 5 DeFi staking platforms that are popular in the DeFi space.
LidoStakeWiseRocket PoolAQRUStake DAO
6. DeFi Insurance
DeFi insurance is similar to traditional insurance, giving asset owners protection against losses or data theft in a decentralized manner. DeFi insurance services pay users for potential losses like smart contract failures, data breaches, and more. Based on the type of insurance coverage, the premium amount will vary. Hence, their profit potential to make money with DeFi insurance would be higher. Also, you could extend your insurance business to billions of traders as your customers.
5 Top DeFi Insurance Platforms
Here are the top 5 DeFi insurance services having highly profitable insurance coverage plans
InsurAce ProtocolNexus MutualOpium InsuranceOpen CoverSolace
7. DEX Aggregator Services
DEX aggregator services connect crypto traders to access the best trading deals across diverse decentralized exchange platforms under a single interface. For decentralized exchanges, the DEX aggregator is the phenomenal component to overcome liquidity shortages. As an investor, you could find decent ways to earn money with DeFi Aggregator Development. Like launching a DEX aggregator with AMM features could generate a higher return on investment.
5 Top DEX Aggregator Services
Here are the top 5 DeFi Aggregator Services best in features and performance.
1inchOKXParaswapMatchaAtlas DEX
8. NFT Marketplace with DeFi Integration
NFT marketplace is another major revenue-making business similar to decentralized exchange. It is the platform that allows NFT creators and artists to list their collections for sale. This marketplace facilitates effective buying, selling, and trading of NFTs in a Peer-to-peer manner. Many dApps require NFTs on a large scale. So by building an NFT marketplace, you can earn money with DeFi-based platforms and services.
5 Top NFT Marketplaces
Here are the top 5 NFT marketplaces that are employed with DeFi integration possibilities.
OpenSeaBlurMagicEdenBinance NFT marketplaceSuperRare
9. DeFi Wallet
DeFi wallet works similarly to ordinary wallets, but with improved security and privacy in a decentralized manner. The DeFi wallet can connect with many decentralized applications to establish secure asset storage. The non-custodial feature lets users enjoy full privacy and control. At the same time, you never fail to make money with DeFi Wallet Development as incredible profits. With multi-chain compatibility and diverse token support, this wallet can collaborate with various DeFi platforms. Establishing a DeFi wallet with MPC technology and cold storage expands your profit potential well.
5 Top DeFi wallets
Here are the top 5 DeFi wallets that come with best-in-class security and wallet services.
MetaMaskTrust WalletCoinbase WalletExodus WalletBinance Web3 wallet
10. DeFi Launchpad
DeFi launchpad services help investors and entrepreneurs launch their tokens through launchpad for establishing a DeFi business. DeFi launchpad services generally collaborate with marketing channels. They conduct token sale events and distribute tokens by collecting certain commissions. By understanding their profit potential, many decentralized exchanges come with built-in IDO launchpad services. Launchpad compatible with crypto exchanges could help you make money with DeFi integration possibilities.
5 Top DeFi Launchpad Services
Here are the top 5 DeFi launchpad platforms helping investors to launch their DeFi business.
SeedifyBinance LaunchpadPolkastarterGameFiKuCoin Spotlight
These are the ways you can earn money with DeFi stably and effectively. However, to launch a profitable business, you need a DeFi platform and token. Additionally, integrating add-on modules with the Platform requires a large investment. Obviously, the huge profits come with some grade of risks similar to any other business.
But don’t come to a conclusion before exploring the other side of the blog. Now let us get into…
How to Earn Passive Income with DeFi?
Here are the ways you can make money from DeFi passively.
Staking assetsYield farmingLending assetsDAO governanceDeFi crowdfundingDeFi consultation
Passive income generation is making money from investments with minimal effort and risks. That means your one-time investment lets you make money with DeFi services consistently. Now, let me elaborate on these methods one by one.
1. Staking Assets
Staking is the process of locking crypto assets in a blockchain network for liquidity purposes. The specific platform will use the assets for various services to gain liquidity. As an asset owner, you will receive interest as a return on your investment. This is one of the popular ways to earn money with DeFi passively. You may approach any DeFi staling services discussed above.
2. Yield Farming
Yield farming is the process of locking assets in the liquidity pools for liquidity mining. The liquidity pool uses these assets to provide liquidity to various DeFi platforms. As a return, the investor will receive rewards that are higher than staking rewards. But, the risk of investment is also higher with this method.
3. Lending Assets
You can lend crypto assets to traders through DeFi lending and borrowing platforms. The process is similar to a traditional loan, where investors will receive the interest. Lending assets is an ideal option to make money with DeFi with less capital. However, be aware of the conditions and guidelines of the lending platform before investment.
4. DAO Governance
Most of the decentralized businesses have a DAO governance system for facilitating platform/business growth. The active platform user will receive DAO governance tokens. This token comes with certain voting authority and utility purposes. You can trade, stake, and lend these tokens for passive income.
5. DeFi Crowdfunding
DeFi crowdfunding is the process of raising capital investment for your DeFi project. You can approach IDO Launchpad services to list your DeFi tokens and raise funds. The token is preloaded with a certain utility purpose. So listing the token on DEXs will create value and demand for your token. Then you can earn money with DeFi tokens in a passive way.
6. DeFi Consultation
The DeFi space is continuously evolving with newer dimensions and investment opportunities. But to be honest, there is a lack of investment guidance. In this sense, starting a DeFi consultation service would be a better option for seamless income generation.
These are all the ways you can make money with DeFi in passive ways. The primary requirements for this investment are DeFi tokens and a DeFi platform. Compared to active income generation, the initial investment and risk will be minimal here. Also, the level of profits or income will be minimal.
So what would be your choice to earn money with DeFi?
👉 If you have decent capital investment, ready to take risks for better profits, then choose active income generation.
👉 If you have minimal capital, don’t want to take risks, and are ready to receive less profits, then choose passive income generation.
The final decision to earn money with DeFi will be yours. If you ask my opinion, I would suggest active income generation. Because we can not neglect the risk completely in both methods. Considering the DeFi growth and profit potential, building a DeFi business is better by taking certain risks.
Meanwhile, both methods require an initial investment for DeFi token and platform development. You can choose cost-effective solutions from a reputed DeFi Development Company to meet financial burdens on investment. Moving forward, we will discuss the…
Risks Associated with DeFi Investment
Any business investment has risks upto a certain limit. Similarly, DeFi investment also comes with the following risks that you should understand before investing.
Smart Contract Vulnerabilities
DeFi platforms rely on smart contract functionalities as there is no middleman supervision. So it should be programmed with technical expertise by following required security measures.
Market Volatility
The cryptocurrency market is highly volatile in nature. The minor market changes will impact your business deeply. So prepare your business strategies to balance the ups and downs of market conditions.
Regulatory Risks
DeFi platforms should adhere to regulatory guidelines for seamless launching and operations in global nations. So ensure the DeFi development follows such legal guidelines properly.
Liquidity Shortages
Liquidity shortages are a major issue in decentralized platforms and applications. Ensure your DeFi platform is capable of generating the required liquidity. Otherwise, extend the platform’s capacity to connect with external liquidity from yield farming services.
Developmental Challenges
Security, performance, user-friendly design, and interface are crucial elements in DeFi development. Having refined development strategies or choosing the right decentralized solutions could sort out these challenges.
So overall, there are considerable risks associated with DeFi development. It is common in both methodologies to earn money with DeFi in active and passive ways. When connecting with professional guidance, you can overcome the said risks easily. Their professional experience and expertise help you decide the right DeFi investment. So plan your business goals and budget and choose the right partner to launch a thriving DeFi business.
Final Thoughts…
Decentralization has induced a new version of financial transition parallel to technical innovations. DeFi has been playing a major role in structuring investment opportunities for various industries. According to Statista, the DeFi market will make a total revenue of $376.9 million by 2025. This signals the growth and profit-making capability of DeFi businesses. That’s why people are enquiring about how to earn money with DeFi.
Indeed, DeFi has diverse opportunities for all types of investment. This blog has outlined the active and passive ways to make money with DeFi clearly. So choose the investment type that meets your budget, income potential, and future growth. Also, connect with the DeFi Development Company to overcome the risks in DeFi investment. I wish you all the best for your earnings with DeFi.
How to Earn Money With DeFi — Smart Ways to Explore was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.