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We have previously discussed decentralised finance and how it is slowly changing the world, but now, new ways are coming up on how we can even make money with it. In this article, we’ll be discussing how to earn money with DeFi in Nigeria.
What is DeFi?
Decentralised finance is a financial technology established on secure distributed record ledgers. DeFi removes the jurisdiction financial banks and institutions have over money, financial products and services.
DeFi brings about the trade and transfer of funds and assets without intermediaries. Decentralised finance has brought about a new system to the financial industry on how it operates.
Instead of putting your funds and assets in banks, you store them in wallets.
Features of DeFi
One of the major features of DeFi is its transparency. All transactions must be shown to other users on the network on the public blockchain. Once broadcasted, all users should confirm the transaction.
Transparency also makes sure all network activity information is available to all users. Additionally, Ethereum and DeFi protocols based on Ethereum are designed with open source code that users can view, audit, and develop.
Anybody can have access to DeFi solutions, and all they need is an internet connection and a cryptocurrency wallet. This is part of the aspects that differentiate DeFi from traditional finance, which has some hindrances.
DeFi gives users full access and total control over their assets and information. DeFi solutions can foster a new era of financial services tailored to the customer by giving you better control over your data.
How To Earn Money with DeFi
1. DeFi Lending:
This is the process of putting your tokens into an account for a while. You are connected with other people who need to borrow crypto. When you do this you get an interest in return.
You can easily lock up your crypto assets on a DeFi lending platform without worrying about middle-men. Over time, you get interest. Remember that you can withdraw your funds from the platforms at any time without paying any fees.
2. DeFi Staking:
DeFi staking is the process of locking up your tokens on a smart contract and earning rewards over a while. These rewards are usually the native asset of a blockchain—for example, ETH of Ethereum. When you stake your tokens, you become a transaction validator for the network. Due to this, stakers receive financial incentives to contribute to the network’s functionality and security.
To start with DeFi staking, you need to buy crypto from a crypto exchange platform. Upon depositing your coins into your crypto wallet, you’ll receive an annual percentage yield (APY) on them.
3. Yield Farming:
Tokens are locked up in a liquidity pool on a DeFi platform through a smart contract in a decentralised application (Dapp). The users are then rewarded with a fee or interest for allowing their crypto assets to be made use of across the platform or by borrowing and selling.
4. Become a Liquidity Provider:
Liquidity providers ensure that token swaps take place more effectively and promptly on a decentralised exchange. In this process, users of DeFi platforms place their crypto tokens into a smart-contract pool. Users will earn a 0.3% fee from all swaps, which are proportional to your share of the pool. You earn more depending on the more trades conducted through the pool.
Read Also: HOW TO INVEST IN DEFI SPACE FROM NIGERIA
We are witnessing the evolution of DeFi, and although it is not at its peak yet, there are many spectacular features it possesses, including various ways to earn money with it. Keep in mind that all these different ways have their pros and cons.
Do not take this article as financial advice; do further research before diving into them.