If there is one sector that I love in the cryptocurrency space is decentralized finance (DeFi). Decentralized finance (DeFi) refers to a new financial system built on blockchain technology that enables the creation of decentralized financial applications and services. DeFi aims to disrupt traditional finance by offering a more transparent, secure, and accessible financial system, allowing individuals to take control of their financial assets without the need for intermediaries.
DeFi applications range from decentralized exchanges, lending and borrowing platforms, stablecoins, insurance products, and more. These applications are typically built on smart contract blockchains such as Ethereum, enabling them to run on a decentralized network of computers, rather than being controlled by a single entity.
You all know how volatile crypto assets can be. The majority of us investors are buying crypto assets, holding them for a period of time, and then selling them for profits or losses. This cycle can repeat over and over until you are lucky enough to make enough money, otherwise, you are likely to repeat this pattern changing this big profit.
But what you may not realize is all the money you are losing all this time. Why should you? The crypto space is filled with dream sellers showing you all the positive side of crypto. It's very lucrative to be a crypto-influencer or a centralized exchange (CEX). All their care is to bring more investors' attention to assets and profit from the investor's actions. Just keep in mind that a CEX still makes money from trading fees whether this is a buy or sell.
If you learn more about about, you will know that investing in crypto is not only about buying, holding, and selling. DeFi applications can help you see investing in crypto with a different eye.
Some DeFi applications offer high interest when you lend your money to other investors for instance. Or maybe, you just want to provide liquidity to a Decentralized Exchange while earning trading fees. Uniwap annualized fees so far are up to $230 billion. That's a lot of fees earned!
Smart investors already understand the power of using Defi protocols. You can check Whales' portfolio on portfolio tracker apps like DeBank. You will see that most of them keep their net worth in Defi applications. I found this random investor on DeBank with $17 million in his portfolio, but he is only holding $626,000 in his wallet. All the rest of his money is distributed in DeFi protocols like Fraxlend, Convex, or Uniswap.
It may seem slow and boring to see your money grow than speculating on some tokens and hoping to make % a 1000 return, but at least with DeFi, your risk is minimal. Plus, you make more calculated decisions than when you count on pure luck on some meme coins that could make you lose thousands of Dollars in a very short time. Or maybe if you lucky trading meme coins, think of investing those profits in DeFi instead of risking losing it by betting on another token. (Of course that's is not financial advice, but it's up to you😉)
There are plenty of DeFi protocols you can search for the one that suits you the most based on their returns and how you can earn rewards.
Investing is a risky business, and crypto investment is even riskier. The truth is we are all in for the profits, so don't put your trust and money in the hands of someone else selling your dreams. You can only make it when you learn the game mostly by researching and by your own mistakes. Defi is only one of many sectors in crypto that you can do more with your investment money. Investment is not gambling, it is a long-term commitment with plans and strategies.
