There are benefits to becoming a millionaire via DeFi. One is that you have several opportunities to earn passive and active income. You are not limited to one single way to make money through decentralized finance. However, this depends on the digital assets at your disposal.
Without further ado, here is a short and simple guide to becoming a millionaire via DeFi
1. Staking:
One of the foremost ways of making money via DeFi is via crypto or NFT staking. As an investor, you lock up your digital asset in a DeFi account and earn an annual percentage yield (APY) on the tokens you hold down. InDeFiaddition, the longer you hold, the more interest you get in return.
Also read : The Ultimate Guide to Defi Staking
2. Liquidity provider:
A liquidity provider is a system that allows you to help maintain a blockchain’s integrity. All you do is ensure that a token swap takes place more efficiently and effectively on a decentralized exchange. Liquidity providers are compensated via transaction fees for the exchange they facilitate.
3. Lending:
DeFi lending allows investors to deposit their tokens into an account where borrowers can loan said tokens to be repaid within a set period. Of course, you lend your crypto assets with interest paid when the period for borrowing elapses.
4. Yield farming:
Yield farming utilizes liquidity pools to reward users. It allows you to earn more cryptocurrencies with crypto assets that you already have. It will enable you to contribute your cryptocurrency into a smart-contract-based liquidity pool. In return, you are paid yields that act as rewards for allowing your crypto assets to be used on a DeFi protocol. The profit earned also depends on the value of the tokens you invest.
It is essential to state that all of the avenues listed above provide a passive way of making money. Like traditional investment methods, there are a few drawbacks to becoming a millionaire via DeFi. One is that the space of decentralized finance is still subject to regulatory interventions, which vary from country to country. Thus, what pertains to making money via DeFi in one country might differ. In addition, digital assets are known to be highly volatile, which might result in the loss of profits during a downturn.
Platforms for decentralized exchange
There are specialized platforms that provide DeFi services to make money. For liquidity providers, there is UniSwap, PancakeSwap and Yearn Finance. The same apps can be used for yield farming. For staking, you can consider Kraken, KuCoin and Coinbase. AQRU, ByBit and CoinLoan also allow users to borrow and provide APY.
Also read : How KYC Regulations Will Impact The Rise Of DeFi
Conclusion
With all said and done, becoming a millionaire via DeFi is not a get-rich-quick scheme. As much as you aim to be a millionaire, it is still crucial to research and be patient. Becoming a millionaire with traditional finance does not happen overnight; this also goes with decentralized finance.
