A Guide to Generating Passive Income Through Decentralised Finance (Defi)

Decentralized finance is one of the most critical innovations in finance. Defi is a term that refers to the financial products and services that run on blockchains. Users can easily transfer, borrow and trade with the Defi instruments. Defi is a modern technology that tackles the existing problems in the financial market. 

 

The below terms will help you to understand the passive income generation from Defi: 

 

• Staking

Staking means getting rewards from the decentralized financial system for locking up assets. If the user deposits Ethereum with Defi for two months, then they will get Ethereum as a reward. 

 

• Lending

You can also make money by lending or borrowing digital assets on the Defi platforms. 

 

• Produce your tokens

The other option to make money with the Defi platforms is to create your tokens and let others use them to earn a return on them. But make sure that your token has some unique functions and that people love to use them. 

 

• Yield Farming

Profit through yield Farming is similar to staking but the staking is based on the liquidity pools. With the staking, you will get LP tokens by locking your assets. But with yield Farming, you can go for LP tokens or swap them for cryptos. 

 

• Smart contract development

The other way to make money with Defi is by developing smart contracts. You can charge developers for using your code after deploying your smart contact in the decentralized network. 

 

All the above points show the different ways to make money with Defi. For more details, you should dig deeper into the Defi instruments and learn more about them. 

 

FAQ

• Which is the easiest way to make money with Defi?

Ans. Staking 

• Does Defi suitable for passive income?

Ans. Yes 

• What is the full form of Defi?

Ans. Decentralized Finance