How to earn 100% per annum and more in DeFi?
DeFi became popular not so much because of the idea, but because of the ability to earn quick money. This is what has always attracted fans of quick earning. We saw the same thing during the ICO and IEO bubble, where everyone dreamed of earning 1000% per day. With DeFi, the situation is somewhat different, but the essence remains the same - quick earnings.
Initially, the DeFi sector offered the opportunity to increase capital on deposits (Compound) or by providing assets for liquidity pools. A little later, the Yield Farming phenomenon appeared.
In the first case (deposit), the average yields were about 10% per year. This is a fairly high indicator compared to traditional bank deposits, which has a rate of not more than 3%.
DeFi has an interesting feature - there are no fixed rates. It is a completely free market, which is formed by supply and demand. Because of this, income rates are constantly changing over the year, and can reach to tens of percent APY. For example, at the current moment, the yield rate of BUSD coins is 22%, and Synthetix is 39%.
In contrast, liquidity pools have a flat fee for liquidity providers, which is 0.3% per transaction on Uniswap. As a result of the exchange, at least two transactions are carried out, 0.6% of transactions are obtained. This resembles the usual trading fees of centralized exchanges.
And the third, most popular way to earn money in DeFi is Yield Farming. This is a mining method in which you get coins for using the DeFi service (take a loan or make a deposit). Thus, the project encourages you the use of its service and you get coins which can be used in the DAO or simply sold.
Now let's figure out how to use all three options to achieve an annual return above 100%.
Let's say you have some kind of ERC-20 coin. You can take this coin as collateral and take out a loan in another ERC-20 token. For taking out a loan, you will receive a new coin every day thanks to Yield Farming.
Then, the received coins with help of the loan you contribute to a deposit. For this, you will again receive a daily reward in the form of Yield Farming, and also annual percentage every day.
In other words, you get twice the return on Yield Farming, and you add extra capital through your investment.
However, this is not all. After you get new coins from Yield Farming, you can choose what to do with them.
- The first option is to simply sell them on the exchange.
- The second is to hold them, waiting for strong growth.
- The third is to put them in liquidity pools and receive fees income from transactions
The first method will be the simplest and most reliable, however, the profitability from it will be less.
The second option is suitable for those who are ready to keep the coin for a long time, or for those who managed to farm coins one of the first and expect growth within 2-4 weeks. However, it must be understood that not all coins can shoot and bring a thousand percent. It turns out that in this option, a stable income will be only from the deposit.
The third option is the most difficult, but in the long-term it can bring much more income than the previous two ways. You just put your coins in the liquidity pool and increase your income through trading fees. The more popular the coin is, the more income you can get. As in the second method, here it is necessary to take into account that this coin is stable in the long-term, and not just another shitcoin that will live for a couple of weeks.
In DeFi, there are many ways to earn over 100% and this is far from the limit. While here it is possible to earn 100% per month and even more, until the hype around DeFi dies down. Which method to choose depends on the user's goals.
If you want reliability, then you can choose only a deposit and receive about 10% per annum. However, it is better to invest in services with the ability to Yield farming. This will allow you to earn from 50% to 100% per year.
We have described an even more profitable option, since we use farming to the maximum. The risks here are not much higher and they are connected only with the level of collateral, because if the collateral drops to a critical level, then liquidation will occur.
The described methods are not the only options for earning money. There is an option more suitable for businessmen - creating your own DeFi project. We know that creating a high-quality DeFi project requires at least $500,000, so we create a DeFi project builder, where the costs will not exceed several hundred dollars. Without a doubt, this way of earning is the best and most profitable. Follow the news of our project and take the opportunity that we will provide you.