We have all heard the term DeFi, which is a contraction of Decentralized Finance. What does it really mean and why is DeFi the next frontier of finance? More importantly, how can we tap into this fast-growing innovation and enjoy gains from it? At the time of writing this, the DeFi market cap stands at $114.10B. In August 2021, veteran crypto investor, Matthew Rosziak, shared via Business Insider that mainstream crypto adoption, the global chase for yield, and elevated inflation are all boosting DeFi’s profile and why he thinks DeFi could be an $800B industry in 2022. This could be possible—according to Forbes, the institutional market is making a move on DeFi. What is Decentralized Finance (DeFi)? In a nutshell, DeFi is an economic paradigm shift – a technology that offers financial instruments without relying on intermediaries such as banks, brokerages, or exchanges by using smart contracts on a blockchain. Players proposed to create an alternative financial system to the existing financial industry. Actors create new values and types of services only accessible on Web 3.0 (decentralized services hosted on a multitude of nodes on blockchain technology).
5 Ways to Make Money on DeFi
There are several ways you can participate in DeFi, be part of this revolutionary technology and make money from it. Here we will discuss the more common ways to go about doing so.
The most basic and straightforward method is to purchase the native tokens that are in the DeFi space. For a list of what these tokens are, check here. This is definitely the most basic and easiest way for those who have just started out on the DeFi adventure but why would you limit yourself to just the purchase of DeFi tokens?
As with all platforms, you can make money with DeFi by simply trading. The only difference is that the platform is decentralized. Uniswap is a good example of a decentralized trading platform. With trading, there are two ways to go about doing this: manual and automated trading. For savvy traders and investors who want to maximize their opportunities from the crypto market, you will often find that they utilize both of these methods. While manual trading gives you more control, it is also more challenging to master in order to make good gains from it; given all the different variables (internal and external forces and conditions) that contribute to its success. With automated trading or algo trading as it is more commonly known, it can be used as an instrument of passive income—the algorithms of trading bots help you execute orders round the clock on autopilot mode, based on a set of parameters or rules so that you don’t have to do the heavy lifting of buying and selling, monitoring charts and markets. For those who want to get started with automated algo trading on DeFi, Superbots is a good place to start. Not only do the automated bots trade on Decentralized Exchange (DEX), you don’t need to pay a fee for using the bots—you only pay when the bots make profits. In addition, there is no account nor KYC needed. Just set up your Metamask Wallet, allocate the capital you want to trade in the Vault to follow a bot, and that’s it! Easy to use, no fuss, and secure.
The next option, you can choose to stake your crypto. How does it work, you may wonder? In a nutshell, it’s quite simple, you just have to block funds (USDT, BTC, ETH, or other) for a determined period of time and collect the interest. ETH 2.0 and ADA are good examples of the above. Take Ethereum Staking as an example – by locking an amount of ETH for a specific period of time, you’ll be contributing to the security of the Ethereum blockchain and in return, earn network rewards. Can you make good profits from staking? The answer depends on how much you’re investing and the time horizon you allocate to it. With Superbots, you will also have the option to stake UBXT and earn attractive rewards and bonuses. UBXT is the token that powers the Superbots ecosystem. To find out more about this and participate in staking, check out here. Is it safe? Just like every investment type, there is always a certain amount of risk involved. Having said that, with cold staking you can stake your crypto using a hardware wallet or another cold wallet. The advantage of this is that the funds are safe because the wallet is not connected to the internet. You need physical access to your wallet to manage the funds.
There is an alternative to staking which is none other than lending. This approach is a lot riskier than staking because for staking, although there is a risk too, you can do it on big exchange platforms such as Binance. So it is not a zero-risk but the probability of not finding your funds is low. Furthermore, with staking, you are helping to secure a network. The lending approach is riskier and can be done on smaller DeFi platforms which are more likely to be the target of a hack than larger platforms. Also, when you use lending, the collateral is often a newly created crypto that can decrease in value. In short, with lending, investors are providing liquidity for other people to trade and in return, they earn interest, a passive income of sorts.
Non Fungible Token (NFTs)
With an NFT market-cap forecast of more than $35B for 2022, to over $80B by 2025, it is safe to say that NFT is poised for exponential growth. Beyond the realm of collaterals, NFT has the capability to represent more complex financial products such as insurance, bonds or options. The union between NFTs and DeFi is however undeniable. In the simplest form, DeFi is the paradigm that has helped NFTs become liquid. Through DeFi networks, you can easily buy or sell your Metaverse tokens using smart contracts, P2P transactions, and more. On the note of NFTs, the team at Superbots will be launching the Bull vs Bear Fight Club NFTs in Q2 of 2022. With these NFTs, you will gain access to many benefits and exclusive games in the metaverse. Be sure to follow our social channels to follow for more news!
Crypto and the blockchain space are revolutionizing the way we work, live, and play at lightning speed. While buying and holding crypto tokens or coins is probably the easiest way to participate in this space, there is no need to limit yourself to just that – “Buy & Hold. In fact, when you expose yourself to other tools and solutions, you are maximizing your opportunities, thereby having the possibility to maximize gains. Although not without risk, it is a good way to diversify your portfolio nonetheless. After all, in life, risks are everywhere! To be void of risks in life is an unrealistic expectation but risk management and portfolio diversification are two tools that will help you ride through the adventure of living, investing, and trading!