As a new market DeFi opens up opportunities to make high profits. Here are 6 ways to help you make money effectively in DeFi.
1. Overview of DeFi
DeFi (Decentralized Finance) decentralized finance, in which financial services are provided through decentralized platforms, based on blockchain technology and smart contracts. DeFi allows users to perform traditional financial services without the need for intermediaries, and those transactions will be performed entirely on their own through smart contracts.
Launched at the end of 2017, the DeFi market has witnessed a leap from $700M in December 2019 to $13B on December 31, 2020, this is an important period marking the beginning of the DeFi summer. In November 2021, DeFi TVL peaked with locked assets reaching $174B. This shows that the DeFi market has been recognized by the community and is gradually developing in parallel with the traditional financial market.
As a young market, DeFi is a fertile land for everyone to exploit. If you know how to take advantage of it well, it will be a giant leap in personal finance.
2. Top 6 ways to make money from DeFi
2.1. Airdrop Hunting
DeFi projects make a splash with airdrop rewards for the community, with some very large airdrops ranging from several thousand to tens of thousands of dollars. Airdrops are a form of Marketing where projects want to reach the most users, so everyone can participate.
Some prominent airdrops include:
Uniswap Airdrop 400 UNI to 250,000 wallet addresses, it is estimated that each wallet received more than 1000 USD at the time of Airdrop.
Aptos Labs, the project will airdrop to those who participate in the Aptos Incentivized Testnet (node running program) (each wallet 300 APT) or have minted Aptos Zero NFT testnet network (each wallet 150 APT). It is estimated that each wallet receiving Aptos Airdrop is worth more than $1000 each.
Jito airdropped to 9000 wallet addresses, low wallets received $10,000.
To find potential projects and research how to receive Airdrops, you also need to be able to do your own research to avoid wasting time and effort on low-quality projects. You can also refer to other sources such as:
Check the project's communication channels like Twitter for the#Airdrop#Retroactive hashtag and see if any projects stand out?
Follow major Crypto channels, groups specializing in Airdrop hunting, Retroactive.
Follow the Twitter channel of Bigcoin Vietnam to receive instructions on making quality retroactive bets.
To participate in Airdrop from projects, you need to prepare wallets from different chains such as Ethereun, Solana, BNB Chain, etc. In particular, you should use a secondary wallet when participating in Airdrop activities from projects. project to avoid the risk of having your wallet hacked.
Read more: What is Airdrop coin? Instructions for making an effective Airdrop for newbies
2.2. Join IDO
IDO (short for Initial DEX Offering) is a form of raising capital through offering tokens on decentralized exchanges (DEX).
IDO opens up opportunities for investors to access, buy and hold tokens of potential projects. In case the project develops successfully, the price of the token can increase significantly after the IDO, providing great profit opportunities for investors. Especially when the market is in an uptrend period, IDO will help you grow your account up to x5, x10 or even a hundred times.
However, buying IDO does not always win, you need to carefully research the projects you intend to buy IDO and the steps to buy IDO for that project to avoid depositing money on fraudulent platforms.
Read more: What is IDO? Detailed instructions on how to join IDO
2.3. Hold token
Holding a token is when you hold a token long enough with the expectation of that token's growth in the future.
This way to make money requires you to have good project research skills and high discipline. On the DeFi market, you can buy quality projects early before they are listed on DEX exchanges.
For example, before Arbitrum launched the token, the backbone projects in that ecosystem such as Camelot ($Grail) working on dex, Radiant ($RDNT) working on lending, GMX working on derivatives all had already started. There is a very hot growth of x10, x20, including Radiant and GMX which have been listed on Binance. If you have good research skills, you can absolutely choose and hold gem tokens and wait for the day to reap the rewards.
2.3. Trade token
Trade token is a form of making money with leverage that requires players to have technical analysis skills and market sensitivity.
This is a short-term way to make money, helping you earn a large amount of money in a short time, but it is also full of risks. If you hold tokens, when the market drops in price you still have tokens and can wait for them to increase to sell. With the token trading method, you can lose your entire account when trading in the wrong direction.
To practice trading tokens well, you should practice trading with small amounts of money first and combine it with learning technical analysis.
2.4. Join Staking
If in the traditional market, you can deposit money in the bank to receive interest at a certain percentage, then staking here can also be understood the same way.
Instead of keeping tokens in your wallet, you can make money by staking tokens on the blockchain platform. Profits for staking range from 2-20% depending on each platform's campaign. This is a very effective method for long-term investors.
The disadvantage of this method is that the withdrawal time will take from 2 to 28 days. If you want to sell the token, you need to wait for the token to arrive in your wallet before selling it.
2.5. Join Lending
Lending is a financial activity in which a lender provides money or assets to a borrower, and the borrower undertakes to repay the loan amount with interest and on agreed terms.
In the field of cryptocurrency and DeFi, Lending has become an important part of the ecosystem, attracting institutional money into this ecosystem, thereby helping the ecosystem expand and grow strongly. strong.
When you will put money into the Lending platform, depending on the structure of each exchange and the token price you will receive a different percentage of profit.
Lenders can participate in a smart contract or DeFi platform, where they put their cryptocurrency into a common pool.
The advantage of this form compared to staking is flexibility, you can withdraw the loan at any time.
2.6. Yield Farming
Farming (or Yield Farming) is the term for someone trying to generate as much profit as possible from their crypto assets, through providing liquidity to DeFi protocols.
To participate in farming you need to provide 2 or more tokens into liquidity pools (Liquidity Pool).
When participating in farming, you need to know the concept of temporary loss. Impermanent loss occurs when the value ratio of the two tokens in the trading pair changes from the initial ratio since you provided liquidity. This can happen when the price of one token in the pair increases or decreases compared to the other token. When the value ratio changes, you may lose part of the original value of the trading pair.
However, this temporary loss in value is only temporary and can be compensated when the value ratio of the two tokens in the trading pair returns to the original ratio. Therefore, temporary losses usually do not occur if you provide short-term liquidity or if the value of the trading pair does not change too much.
Understanding and managing loss is important when participating in liquidity provisioning in DeFi, and it can impact your bottom line.
3. Conclusion
DeFi is still in its early stages and the future growth potential of DeFi is huge, so seize the opportunity to change positions. Above are 6 ways to make money from DeFi that Theblock101 wants to provide for you.
