DeFi - How I Lend & Borrow To Minimize Risk & Maximize Returns

By bchristensen | defi logic | 2 May 2022


Wouldn't it be nice to diversify your portfolio without selling other assets or spending more money in general? This is possible, thanks to the numerous lend & borrow platforms available. I'm not here to shill one vs the other, but would like to provide how I use these tools to minimize the risks while borrowing & maximize long term gains while lending. Certain platforms are better for lending vs borrowing & my favorites pay interest whether you decide to just lend, or lend and borrow, etc. (yes it is possible to borrow at 0% interest and still get payed interest on your collateral, the assets you lend) Thanks to DeFi, if you combine that knowledge with your favorite yield farming platforms, you have the ability to hold onto your current assets and get payed interest,  borrow more crypto or stable coins, and farm on your favorite platform with what you borrowed in order to pay off your debt over time and maximize the collateral you lend (which leads to the ability to borrow larger amounts over time, or simply increase the amount of your collateral, which means more $ saved, & payed back to you in the short & long term!) Now, in order to ensure the collateral you deposit backs the amount you borrow, I highly recommend not borrowing large sums at once & instead borrowing small amounts over time. This is a safe way to potentially increase your collateral if the price of your crypto drops (basically a way to avoid getting liquidated out of your position) I've learned to not rush when it comes to crypto lending & borrowing, even if that means I cant jump into a farm with a large sum of money at first. Either way, this patient strategy that's worked for me has allowed me to Dollar Cost Average not only into farms and their fluctuating prices, but also DCA into the amount I lend in general. Another way you can use this for example, lets say you deposit $100 in BTC and can borrow up to 80% of the amount lent($80) but you wish to maximize your BTC holdings without farming. I recommend borrowing 10-20% at a time, converting into BTC, and depositing that back into your collateral. This strategy alone can maximize your holdings, minimize your losses through DCA, and even get payed interest on your BTC over time for doing so! There are numerous more ways to strategize when it comes to lending & borrowing in DeFi, but I hope this provided you a strong basis of knowledge/ routes to consider before jumping into it especially if you're new. Thanks for taking the time to read & have a nice week. 

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bchristensen
bchristensen

cryptocurrency enthusiast


defi logic
defi logic

This blog is dedicated to provide the latest news, tutorials, tips & tricks when it comes to DeFi. I look forward to sharing my personal favorite DeFi projects as well.

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