Explaining Defi and How to Make Passive Income from it
The presence of third parties in the traditional financial system makes it difficult to have a seamless transaction due to excessive charges for wire transfer, card maintenance, and SMS alerts!.
Sometimes it can be frustrating leaving you with money that is not complete.
For example, if I want to send money from Nigeria to someone in the UK and I decide to make use of PayPal, I will be charged for both depositing the money in my PayPal account and transferring it from my PayPal account.
This is frustrating because if my initial plan was to send $2000, the recipient could end up receiving only $1850 due to charges deduction. This is why in this article, I will be writing about DeFi and how it can be leveraged.
What is Defi
DeFi is also known as decentralized finance. DeFi is a financial system based on the blockchain network. It allows peer-to-peer transactions through a means called “Smart contract”. This eliminates the idea of institutions facilitating the transactions.
DeFi aims to create a free financial system for individuals and corporate organizations. A financial system that is free of human errors, corruption, and folding of traditional banks.
Defi opens the door of opportunities for buyers, sellers, and borrowers to interact. DeFi also creates a financial system with low cost, no third parties, increased speed, and no restrictions.
DeFi provides the solution to the following where traditional banks have failed:
1. Send money across the globe
2. Access stable currencies
3. Buy insurance
4. Trade tokens
5. Start a cryptocurrency savings account
6. Borrow funds with and without collateral
7. Fund ideas and business concepts
10. How to leverage on DeFi
Statistics have shown that the DeFi market has had an exponential increase in the last few years.
From 2017 to January 2022 the market has had more than 88x growth, from $1B to $88B, which is very remarkable. Below is data from statista.com
There are many ways to leverage this fast-growing market. Many financial analysts argue about the DeFi market replacing the traditional financial system. The DeFi market opens the room to make money in so many ways.
WAYS TO MAKE PASSIVE INCOME IN THE DeFi MARKET
Many financial analysts argue about DeFi replacing the traditional system, so let’s take a look at how the DeFi market creates opportunities to make money in many ways”
1. DeFi STAKING:
This leverages the benefit of decentralized finance. It enables one to make passive income on your locked crypto assets.
Locking your crypto tokens into a DeFi smart contract can yield a 25% APY ( Annual Percentage Yield), allowing you to become a validator on that network.
2. DeFi LENDING AND BORROWING:
Defi lending platforms offer crypto loans in a trustless manner without intermediaries.
This allows users to enlist their crypto coins on the platform for lending purposes. A borrower can take a loan through the decentralized platform known as P2P lending, the lending protocol allows the lender to gain interest.
There are so many opportunities to explore in the DeFi market. You will agree with me that this is not only decentralized finance but better finance!!!
Thanks for reading!
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