This is part 13 in my cryptocurrency educational series.
⭐ Each part builds on the previous ones, so I suggest starting with:
Cryptocurrency 101 series (i.e., core principles and Bitcoin):
- Part 1: Why should I care? What’s in it for me? Why is crypto important (it’s about a lot more than just making money!)?
- Part 2: How crypto actually works, why Bitcoin is valuable (even if it’s just “made up!”), and what you should know about blockchains (the tech behind them and how they could influence the future of our world)
- Part 3: How the blockchain keeps running, where new Bitcoins come from (i.e., how mining works), and concerns about Bitcoin’s environmental impact
- Part 4: How crypto offers autonomy, why it can’t be stopped, and the value of decentralization
- Part 5: How to store and use cryptocurrency, some basic cryptography, how wallets work, identity management, and the future of democracy
- Part 6: Overview of the different types of wallets, which one is best for you, what to be careful of, and why a hardware wallet might be worth the investment
Cryptocurrency 201 series (i.e., intermediate principles, Ethereum, and other coins/tokens):
- Part 7: Ethereum (the #2 most popular cryptocurrency, and the one I’m most excited about), smart contracts, dapps, gas (and the high gas fee problem), Proof of Stake (PoS), and Ethereum 2.0
- Part 8: Coins vs. tokens, and some real Ethereum use cases—oracles and DEX’s
- Part 9: Intro to NFT’s (collectibles, research funding & historical significance, and music)
- Part 10: More categories of NFT’s (art, video games, virtual reality)
- Part 11: Wrapping up NFT’s (what you can actually do with them, upsides, downsides, risks)
- Part 12: DAO’s (organizations managed by algorithms, governance tokens, collective ownership, and the “network state”)
Cryptocurrency 301 series (i.e., advanced principles, investing):
- Part 13: DeFi & CeFi, reinventing banking with peer-to-peer finance, stablecoins, and borrowing & lending
- Part 14: More DeFi (insurance, payments, derivatives, blockchains, exchanges, liquidity staking, and impermanent loss)
- Part 15: Wrapping up DeFi (LP tokens, yield farming, calculating return, yield aggregators, and major risks)
- Part 16 (in progress): Investing (principles, risk/reward, and my favorite options for making money in crypto)
Part 13 Reading Time: 34 minutes
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In previous posts in this series, I’ve written about all sorts of use cases for crypto—from collecting innovative art to escaping oppressive governments.
But, I imagine that the majority of people are interested in crypto for financial reasons.
Over the next three posts, I’m going to unpack a popular crypto use case that has the potential to make you a lot of money. But it’s even easier to lose a lot here if you don’t understand what you’re doing.
Thanks for reading this far. We’re now getting into what I would call advanced territory (especially in the next two posts where I’ll go into specific tactics); so, please make sure you’ve read at least Part 7 and Part 8 before this post, if not my entire crypto series (starting at Part 0).
It pains me whenever I see someone appear on Reddit who barely understands what a wallet is, but I see them asking which DeFi platform they should put a large chunk of money into. Consistently making money in DeFi is hard, and anyone who tells you otherwise is confused themselves or being dishonest.
That said, I personally have a lot of money invested in DeFi platforms, so I’m not telling you it’s a bad idea. I’m simply saying to go in prepared—paying close attention to security, not taking on too much risk, and being on the lookout for scams.
If it looks too good to be true, it probably is. And if you think DeFi is easy, you’re probably missing something.
DeFi isn’t just about making money either. As you’ll see, it’s also about personal freedom, reinventing banking, and providing access to financial opportunities that have previously only been available to the rich.
(By the way, I’m not an investment advisor, and none of this is investment advice.)
Ethereum use case #5: DeFi (decentralized finance) and CeFi (centralized finance)
So, how can crypto make you money (while at the same time reinventing the banking industry)?
That’s where DeFi and CeFi come in.
To get started, let’s define a few terms:
- TradFi (traditional finance) refers to the world of stocks, bonds, brokerages, insurance companies, loans from banks, and so on. In short, it’s the way things have always been done prior to crypto.
- DeFi (decentralized finance) is an effort to recreate pretty much everything that TradFi offers (investment opportunities, insurance products, loans, etc.) but in the crypto space. Note the keyword “decentralized,” meaning that the goal is to do all that without a single central authority governing everything. In other words, to retain everything that makes crypto great: censorship-resistance, no middle-man, more access for a broader range of people, transparency, the ability for anyone to contribute to the code of the projects, etc.
- CeFi (centralized finance) is somewhere in between. In the CeFi space, there are for-profit companies that will manage your crypto for you like a bank does—they’ll invest it or lend it out so that they’re able to pay you a nice interest fee. Many of these opportunities also include insurance (remember that nothing in DeFi or CeFi is insured by the FDIC like a traditional savings account is).
At first, it might be a bit confusing to figure out if a crypto investment is DeFi or CeFi—both will involve a cryptocurrency (e.g., BTC or ETH), and they’ll both use some of the terminology you’ve been learning, like “gas fees.”
Here’s the easiest way to tell the difference between DeFi and CeFi:
A DeFi product will ask you to connect your wallet (e.g., MetaMask), whereas a CeFi product will ask you to transfer over cryptocurrency (i.e., to send it from your wallet to theirs).
In other words, a DeFi product will have a button that says something like “Connect Wallet,” whereas a CeFi product will give you a wallet address to send crypto to.
When you use DeFi, the crypto coins or tokens might disappear from your wallet, but they’ll often be replaced with some kind of placeholder token to represent the assets you’ve entrusted to the DeFi product.
What’s really happening with DeFi is that you’re allowing the code of a smart contract to manipulate some of your assets for you, so it’s kind of like letting an open-source robot (i.e., a robot whose inner workings are visible) come into your vault to manage your money for you.
In contrast, CeFi is like moving your money from your vault to a company’s vault.
So, which should you choose?
Personally, I use a mix of DeFi and CeFi products. I’ll give you some specific recommendations in my upcoming post on investing.
For now, I’ll focus most of this post on DeFi (because it’s more aligned with the spirit of crypto), and I’ll explain some of the general ways that the crypto community is aiming to recreate and innovate the key offerings of the TradFi world.
DeFi’s goal is massive and massively disruptive.
Both DeFi and CeFi are aiming to replace the current financial system (TradFi) with something brand new that’s built on cryptocurrency, blockchain technology, and smart contracts.
When I say “replace the current financial system,” that encompasses a whole lot.
Think about every reason you’d ever go to a bank: savings accounts, mortgages, small business loans, etc. Think about every reason you’d go to a stock brokerage company, a payday loan company, an insurance broker, etc.
The goal here is to replace all of that with services you can easily use from your home computer with lower fees, increased privacy, and better returns on your investments.
You might begin to see why a lot of large financial institutions are fighting crypto.
To be clear, this new system is built on crypto technology, but it also works just fine with traditional money (e.g., US dollars). It doesn’t require everyone to abandon their regular currency in favor of Bitcoin or Ethereum.
However, regular currency does need to be converted into a form that blockchains can interact with since blockchain ledgers are all based on crypto coins and tokens.
“Stablecoins” are the crypto version of traditional money (i.e., fiat currency like US dollars).
A stablecoin is a crypto token whose value is pegged to (i.e., based on) the value of a traditional asset, such as gold, US dollars, or Euros.
Most crypto is highly volatile (meaning that the value of that coin or token frequently changes), so stablecoins were invented to be more consistent.
For example, USDC is a popular ERC-20 (Ethereum-based) stablecoin pegged to the US dollar. Theoretically, 1 USDC should always equal $1 USD. In practice, it tends to fluctuate between $.997 and $1.000, occasionally going further out to $.990 or $1.010. But basically, you can think of USDC as the digital version of the US dollar—the unofficial version that is, since it’s not controlled by the US government.
By the way, USDC isn’t the only stablecoin based on the dollar—there’s also USDT, TUSD, BUSD, and others, all created by different organizations. And, each blockchain network has its own set of stablecoins.
Since a stablecoin is pegged to a traditional asset, the idea is that whichever organization mints that stablecoin should own the equivalent amount of US dollars, gold, or whatever other asset they’re using as collateral. That’s called the reserve asset, and it provides financial backing so that the value of the stablecoin isn’t just made up.
Periodically, there’s doubt cast on whether a given stablecoin truly has the full backing that its creators claim—nearly $70B USD in the case of Tether (USDT). That’s where third-party audits are valuable, which Tether in particular has been cagey about (so, I try not to use it unless I have to).
Also, there are some types of stablecoins (like UST, on the Terra blockchain network) that use complex algorithms to keep their peg to the US dollar but don’t actually hold the equivalent amount of US dollars in reserve.
In any case, the idea behind stablecoins is to combine the best of both worlds: the stability of US dollars (or Euros, pounds, etc.) plus all the benefits of blockchain technology that we’ve explored in previous posts.
Ok, so why is DeFi awesome?
Here are five big reasons:
#1: Passive income with a fantastic return on investment:
The average interest rate for traditional US savings accounts is 0.06%. With DeFi, here’s a sample of the interest rates you can get:
- Aave, which I would consider a conservative DeFi project, offers an APY (annual percentage yield, i.e., interest rate) that’s typically in the range of 2-3% on USDC (the stablecoin pegged to the US dollar). That’s over 30 times higher than what a US savings account will give you.
- Yearn, which I would consider a low-to-moderately risky DeFi project for this particular use case, offers an APY that’s typically 5-7% on USDC, which is over 80 times higher than the savings account.
- Then there are the high-risk DeFi projects which literally earn APY’s as high as 200-500% or even into the thousands. As you might imagine, those typically don’t last long before they implode, so you have to be extremely careful with any APY that seems too good to be true.
(Personally, I’d suggest caution with anything that promises over 10% APY—make sure you really understand it, start slow and small, and put some serious thought toward your security and risk mitigation strategies. Again, I’ll cover this in my future post on investing.)
In any case, DeFi offers plenty of opportunities to begin to achieve the financial dream that so many of us have: passive income—i.e., setting up our money to automatically generate more money for us over time without requiring active labor.
#2: Composability (and transparency):
“Composability” means that different DeFi protocols and dapps (that were created by different teams) can communicate with each other (and build on each other)—all in a way that’s both secure and trustless.
(I explained in part 5 how “trustless” means that different people or systems can send money to each other without having to trust each other or even know each other’s identities. Instead of needing to trust another person, they can put their trust in the blockchain system itself.)
This composability attribute is one thing that’s responsible for such huge APY’s. Because all these different DeFi platforms are open, transparent, and connectable, it’s possible to program smart contracts to chain them all together.
For example, DeFi platforms like Yearn offer pre-programmed strategies (called Vaults) that automatically execute a complex series of DeFi investments across multiple platforms with one click.
You literally just connect your wallet (containing ETH, USDC, etc.), pick one of Yearn’s vaults, then press a button. The Yearn system will, for example, use one platform to convert your ETH into a different token, then invest that new token to provide liquidity on another platform, then stake the resultant LP token somewhere else. Finally, the system will take the profits from all those things and continually reinvest them to keep making you money over time. (Don’t worry: I’ll explain liquidity, LP tokens, and staking in the next post.)
The cool part is this: This is DeFi, not CeFi, meaning that you retain custody of your assets in your wallet. At no point do you ever give Yearn your private key or send your money from your wallet to theirs. You’re just giving their dapp access to temporarily manage your money for you according to Yearn’s smart contracts (which are transparently available on GitHub).
To be very clear: Nothing at all like this is possible in traditional financial applications—almost all of which are closed, opaque ecosystems controlled by for-profit corporations.
#3: Dramatically less bureaucracy, increased privacy, and improved access for people from marginalized communities:
With a traditional bank, you have to jump through all sorts of hoops to use most of their financial products—filling out forms, giving them your social security number, providing a copy of your driver’s license, undergoing a credit check, etc.
That bureaucracy is not only annoying, but it’s a significant barrier to people from marginalized communities. For example, this 2020 research paper from the Poverty Solutions group at the University of Michigan examines how traditional financial services “advantage wealthier and white customers and exclude and marginalize Black, Brown, and poor white customers.”
With DeFi, you literally just connect your crypto wallet, click a few buttons, and the smart contract automatically sets you up to begin receiving passive income.
It’s important to point out here that the US government has been pushing for more identity logging in the crypto space. But, so far at least, that’s mostly applied only to centralized exchanges and CeFi products rather than DeFi.
If you ever hear the term “KYC,” that stands for “know your customer.” That’s when the government—typically the US or the EU—requires some crypto companies to verify customer identities via a driver’s license photo, for example.
Many people in the crypto community are fighting to limit KYC requirements (not to mention addressing the incredibly convoluted way crypto is currently taxed in the United States).
DeFi promotes individual freedom by offering an alternative to oppressive policies of financial institutions and governments.
Some banks have forbidden their customers from transferring their own money from their bank account to crypto exchanges like Coinbase.
How do the banks explain that decision? They usually claim that crypto is used for money laundering or illegal activities, even though US dollars have been used for more illegal activity than crypto has.
Similarly, platforms like Patreon have shut down projects that make them look back in the eyes of traditional institutions—for example, in the realm of pornography or sex work.
Here’s a quote from an open letter from content creators (entitled “Don’t abandon us”) protesting Patreon’s decision to ban accounts associated with adult content: “This email exemplifies the mentality of Patreon and other tech companies that their image, perhaps to investors or banking partners, is more important than the wellbeing of the legal content creators who rely on Patreon as a source of income and one of the only ‘safe’ spaces for [sex workers].”
Why did Patreon do that? As TechCrunch reported, this crackdown was likely due to “pressure from payment partners,” and “the changing standards of credit card companies like Mastercard [that] are affecting how its creators can make money online.”
OnlyFans, another website similar to Patreon that allows creators to be compensated for their work, decided in August to also ban sexually explicit content. The decision blew up because OnlyFans is well-known largely for that type of content. Ultimately, the CEO explained things this way: “The change in policy, we had no choice — the short answer is banks.”
As another example, cannabis dispensaries are still unable to take credit card payments even if that substance is legal in the state they’re operating within.
Certainly, Patreon and OnlyFans are private companies free to operate as they wish. But my point here is that crypto at least offers more options. The common denominator between those issues with Patreon, OnlyFans, and cannabis dispensaries is that, even if the service they’re offering is legal, the TradFi banking system still refuses to work with them.
Think about people living under oppressive regimens too. DeFi could offer a way out if an oppressive government decided to, say, freeze the bank accounts of an ethnic minority group or a religious group they disagreed with.
So yes, a lot of people get into DeFi because of the great financial returns, but it’s about a lot more than that. It’s about fighting for the freedom to live your life the way that you choose to. DeFi allows you to do that by keeping your financial assets decentralized and not able to be shut down.
#4: Cutting out the middle-man, and enabling peer-to-peer finance:
With DeFi, the whole idea is to decentralize finance. That means that when you want to take out a loan, for example, you can do that without needing the approval of some central authority.
Remember the vending machine analogy I used for Ethereum back in Part 7? Everything in DeFi is run by smart contracts, so the idea is that you can simply “press a button on the vending machine” to easily obtain almost anything, including, say, a loan or insurance.
Because it’s all decentralized, the loan money comes not from a bank but from other users—in other words, it’s peer-to-peer lending.
Remember that term “trustless” again (from Part 5)? It means that we’re aiming for DeFi users to be able to lend, borrow, buy, and sell to and from each other—all without needing legal contracts or any kind of trust in the other parties involved.
If you’re lending your money out on DeFi, you don’t even need to know the identity of the borrower—instead, you can trust in the system (i.e., the smart contracts) to manage it all for you.
DeFi lets us beat banks at their own game. It represents a major shift in power and access, allowing ordinary people to participate in strategies that had previously only been available to the top 1%.
If you haven’t lent money before, it might seem scary or dangerous. But if you look into how traditional banks work, it turns out that you’ve probably been lending your money out for a long time without realizing it.
Whenever you put money into a traditional savings account, the bank can pay you interest on it because, behind the scenes, they’re lending it out and making money on it themselves.
That interest rate that you receive is just a small fraction of the money that they actually made.
Think about it: A bank like Chase makes over $100B/year in revenue and employs hundreds of thousands of people. Chase needs to pay all those people’s salaries, plus the upkeep of their physical offices and branches worldwide. Imagine how much all that costs.
Where are they getting all that money?
There are several ways, but their #1 source of revenue is “consumer & community banking”—in other words, the fees they charge customers and the money they make by lending out customers’ money.
With DeFi, instead of the bank owning all that infrastructure and receiving all those fees as profit for their shareholders, the money goes back to the people—to the DeFi platform’s customers who get higher interest rates and lower fees, and to the DeFi platform’s supporters who own that platform’s token (and who participate in its DAO, if it has one).
A DeFi lending platform like Anchor Protocol offers amazing interest rates in part because it has zero employees, zero expenses, and zero physical offices.
In other words, DeFi is one solution to the problems with the “top 1%” that people have protested since Occupy Wall Street.
Instead of letting endless profit accumulate only in the pockets of the very wealthy who run (or have access to) traditional financial institutions, DeFi decentralizes financial power and governance, and it gives ordinary people access to complex financial instruments that have the power to multiply wealth.
Part of the reason those traditional financial institutions have amassed such huge profits is because of their opaque and convoluted products like derivatives and predatory loans. One of the major causes of the 2008 financial crisis was that people were getting loans that were too complicated to understand.
In contrast, with DeFi, everything is completely transparent. Plus, if you disagree with how a DeFi platform is run, you can join their DAO or contribute to their code to make your voice heard and improve it.
This is an opportunity to reinvent the entire financial system, with more openness, increased access, and the possibility for regular people to achieve far more lucrative financial outcomes in their lives.
So what specifically can you do in DeFi?
I’ll go through five major categories of DeFi offerings, along with the most popular platforms/products in each.
Let’s start with one of the most popular DeFi use cases, and I’ll cover the remaining ones in the next two posts:
DeFi use case #1: Borrowing and lending money (plus, “yield farming”)
With these platforms, you can essentially do two things:
- Borrow money much more easily than from a traditional lender like a bank. You can use this money for something practical like fixing your broken car or for something speculative like buying more cryptocurrency.
- Lend out your money at great interest rates and without needing to worry much about whether or not the borrower will actually pay you back. Rather than just letting your cryptocurrency sit in your wallet, you can have it work for you by lending it out and earning passive income.
Both of these are easier than you might think.
Here’s how it works:
Decentralized platforms like Aave are typically organized into lending pools.
If you want to lend or borrow money, it doesn’t happen one-on-one between you and a single other person. Instead, the risk is spread out across an entire pool of participants.
That’s why you don’t have to worry much about whether or not the money you lend out will actually be repaid—because your money is entering a giant pool of assets from which the loan will be provided.
Aave offers many different pools for different types of cryptocurrencies. Each pool has millions or billions of dollars worth of cryptocurrency in it from many different users all over the world.
To lend out your money, you start by browsing their list of pools (under the Markets tab in the dapp). On the left, you’ll see the type of cryptocurrency in that pool, including ones we’ve discussed before, like ETH, LINK, and UNI. Each asset pool also lists a Deposit APY, which is the annual percent interest you’ll get for lending out your cryptocurrency of that type (i.e., depositing it into that pool).
It’s pretty easy to lend money this way—here are the basic steps:
- Buy some cryptocurrency (e.g., ETH or LINK) on an exchange like Coinbase.
- Transfer that crypto into an Ethereum wallet like MetaMask.
- (If you’re not sure how to do that, Google “how to transfer from coinbase to metamask” and watch one of the videos or read one of the step-by-step articles. Also, start with a small transfer first to make sure you’re doing it right.)
- Also note that most DeFi applications require MetaMask or a similar browser extension-style wallet. You can’t use DeFi platforms if your crypto is in a centralized exchange like Coinbase.
- Visit Aave (or whichever DeFi lending website), click the button to launch the Aave dapp, and connect your MetaMask wallet.
- Choose the pool/market associated with the cryptocurrency you want to lend.
- Click the Deposit button, check the suggested gas fee, and complete the transaction.
- Note that gas fees are quite high at the time of this writing. But, gas is a fixed value, not a percentage of the amount of money you’re lending. So, lending $100 won’t be very profitable right now if you pay $50 in gas fees. But, lending $1,000 could still make you a good profit on the right platform and pool.
- Finally, your account will automatically start earning interest, and you can withdraw at any time.
- By the way, don’t forget that you’ll need to pay gas fees on the way out too—when you stop lending.
Notice something amazing here: You just lent out money, and you never had to deal with another human, never had to fill out any form, and never had to provide any kind of ID. With just a few clicks, you’re earning interest on your money—and a lot more interest than a bank would give you in a savings account.
Yield farming: how to maximize returns while managing risk
I’ve seen several different definitions for “yield farming,” but here’s a basic one that I think encompasses it:
Yield farming is the practice of seeking lucrative ways of lending out or locking up your cryptocurrency in exchange for rewards.
It’s common for yield farmers to move their crypto around to different DeFi lending platforms as the various pool rates rise and fall. I suppose it’s kind of like farming because you’re continually seeking out the most fertile soil to generate the best yield (i.e., interest rates).
The trick here is that you’re constantly balancing risk versus reward (plus time invested in managing all this and keeping up with the latest trends). As you might imagine, the yield farming opportunities that offer the most reward are also the riskiest.
I’ve personally found it challenging to fully understand all the risks involved in these things. So, the general rule I use is to compare a given opportunity’s promised rewards to similar opportunities in that class. If a certain opportunity seems far higher than its peers, it’s probably too good to be true (i.e., there’s some risk that I’m not entirely understanding).
For example, you might try comparing apples to apples by checking the interest rate on the USDC pools on various platforms, or the ETH pools, etc. rather than comparing, say, the USDC pool on one platform to the LINK pool on another.
In the next two posts, I’ll go over some of the risks in the DeFi space, plus some more advanced strategies for yield farming and maximizing returns. But here’s a quick preview of some of the risks involved:
- High gas fees
- Impermanent loss (which basically just means you would have been better off buying and holding the token rather than investing it in DeFi)
- Stablecoins losing their pegs (i.e., no longer matching the underlying asset they’re supposed to be)
- Smart contracts failing or platforms being hacked
Ok, we’ve covered a lot related to lending in DeFi. Let’s move on to borrowing.
You can easily borrow money from these lending platforms by putting down collateral in the form of a different cryptocurrency.
Here’s a typical example use case: Say you have a lot of ETH and you have a sudden financial surprise in your life—your car breaks down, your house floods, or whatever else, and you suddenly need US dollars to pay for it.
But, you don’t want to sell your ETH because (a) doing so would be a taxable event (in the US at least), meaning you’d have to pay tax on however much the ETH had risen in value since you bought it, and (b) you believe that ETH is going to keep quickly rising in value, so you don’t want to miss out on that upside.
So, what you can do is deposit your ETH into a platform like Aave as collateral (meaning their smart contract hangs onto it); then, you can withdraw a certain percentage of that ETH’s value as, say, USDC—which you can easily convert to US dollars on Coinbase.
There are more nuances about collateral, but the most important thing to know is this:
When you borrow and put forward a cryptocurrency (like ETH) as collateral for that loan, you have to be very careful not to borrow too much. Otherwise, if the value of your collateral drops too far (e.g., the price of ETH declines), your loan might be liquidated, which means you lose money. On the other hand, when you put forward more collateral than you need to, that’s known as over-collateralization, which can help protect you.
The key number here is the LTV (loan to value ratio), which refers to the percentage of the value of your collateral that you take out as a loan. For example, if your collateral (say, ETH) is worth $1,000, many DeFi platforms will allow you to take out a loan worth up to half that: $500 (which could be in the form of USDC or some other cryptocurrency).
A $500 loan with $1,000 collateral would be an LTV of 50%. However, a safer LTV might be 35%, meaning you’re only taking out a loan of $350. That way, if the value of your collateral (ETH in this case) declined, your loan wouldn’t be liquidated. Instead, your LTV would simply rise (e.g., if the value of your collateral declined from $1,000 to $900, your $350 loan would now be an LTV of 39% instead of 35%).
As you can hopefully see, there’s a lot of complexity to borrowing, so please do your homework before trying it.
All of that was in the realm of DeFi. But, I’ll also share a few of the most popular CeFi platforms for lending and borrowing:
As an example for lending on BlockFi, you can currently earn 4.5% APY on Bitcoin, 5.0% on Ethereum, or 8.0% on US dollars (which they convert to the stablecoin GUSD). For borrowing on BlockFi, you can get an interest rate as low as 4.5% if you keep your LTV (loan to value ratio) at 20%; or, you can go with an interest rate of 9.75% for an LTV of 50%.
Remember that CeFi platforms are run by for-profit companies. So, they’re often easier to use and offer competitive rates; but, they’re also custodial, meaning you’re sending them your crypto to hold for you rather than retaining control of it yourself as with DeFi platforms.
CeFi can certainly be safe, especially if you stick with one of those five platforms I listed. But, it’s important to remember that you lose many of the benefits of decentralization that I’ve explained throughout this series (e.g., privacy, protection from censorship or asset seizure, the ability to participate in the governance of the platform, etc.).
Hopefully, you’re beginning to see just how many opportunities there are in the crypto world to make money—far beyond just buying and holding crypto coins and tokens. Plus, along the way, you’re supporting a brand new, open & transparent banking infrastructure that allows almost anyone to participate in high-yield opportunities.
Next time, we’ll explore four more categories of DeFi: getting insurance, handling payments, working with derivatives, and the most complicated one with some of the highest risk and highest reward: liquidity staking.