According to the words of tech entrepreneur, Andreas Antonopoulos, earning money on Defi platforms is very easy but people always ignore the platform because of the high risk involved.
What is Defi Platform?
Decentralized Finance (Defi) is a decentralized platform that includes digital assets, smart contracts which are all built on the Ethereum blockchain. In shorter and understandable words, it is a decentralized network built on blockchain technology that allows you to invest, borrow, and gain interests with every activity.
The Defi platform works like a market place where the buyers and sellers can meet and negotiate without the need for a third party. Defi platform allows the users to borrow, lend, and invest money on the platform without the need for a financial institution acting as an intermediary. Instead of a financial institution being present, their role is carried out by the smart contracts protocol. The Defi market has grown considerably over the years and according to statistics, the number of tokens locked up is said to be around $1 billion.
Even though the platform is for carrying out diverse activities without the need for a financial institution to act as an intermediary, there are several ways to earn Bitcoins on the platform which are;
Owning Decentralised Finance contracts
According to Antonopoulos, he noted that users on the platform can own Defi contracts and use it to generate passive income with bitcoins without having to let go of their coins. Passive income means that bitcoin holders can convert their assets to crypto like Ethereum or Dai and lend it out. After lending it out, at the agreed and proposed return date, the tokens are returned with so much interest depending on the duration of the lending. Even as risky as the platform is generally, this is one move that could generate more Bitcoin for a user on the platform.
In the words of the tech entrepreneur, he noted that even though it is a risky venture as regards the volatility that is always witnessed in the crypto market, the platform has attracted more investors than in previous years. “Ethereum may have problems. It may have bugs. The consensus algorithm may have failures. You may have increased in the gas price, which leads to other cascade problems. And all of those things can cause you to lose some or all of your invested capital," Antonopoulos said.
Hodling
Even though this method is one of the riskiest methods of earning on Defi platforms, users still earn as little as possible with this method on Defi platforms. This method is risky in terms of the surge or decline in the amount crypto is worth and since the assets are just lying there in the wallets, and market activity would affect them and they will appreciate and give the hodlers more assets that can later be converted into Bitcoins.
Steps on how to earn on DeFi platforms
With the majority of the people present in the crypto space already taking to DeFi as a means to make so much profit at a time when volatility has rocked the crypto industry. Below are the four quick steps to take if you want to earn enough profits through DeFi on a platform like DEX.AG
1. Fund your wallet with ETH
The first and crucial step is to get enough Ethereum into your wallet. It would be best if you had the keys to the account so you won't risk losing your funds or profits generated in the process. As crucial as owning your private keys is backing them up somewhere safe, in that case, if you lose them, you will be able to get them back.
2. Exchange your ETH for DAI on the DEX.AG platform
DEX.AG is one of the most popular websites when it comes to decentralized exchange. The perks of being the best come with the provision of crucial features and functions as it provides you with a wide variety of price specifications. Another thing is the transaction fee, which is one of the lowest among decentralized exchanges.
3. Click on the Earn income tab
After exchanging your Ethereum for DAI on the platform, you head to DeFi pulse, a website where you can get the latest ranking of DeFi protocols. The DeFi pulse Earn Income page compares the profit rates you stand to earn when you lend out money.
4. Pick a lending protocol that you like
After all of the above is done, you need to find the best lending protocol that will provide you with the best interest rates. After picking the lending protocol and confirming, you will be directed to the app/service page where you will monitor your profits. Most people are in compound finance, which is the most popular lending protocol presently. When you're ready to take your earnings, you use your private keys to withdraw all your profits. As a result of the absence of the lock-in feature on the site, you can withdraw anytime you want.
In conclusion, even though the Defi platform promises mouth-watering deals to earn bitcoin, it is quite a risky venture but when things go according to plan, you stand to earn lots of income. With the recent volatility in the crypto market, the lending method is the only advisable method to earn Bitcoin on the platform.