Managing cryptocurrencies and financial transactions are much easier because of Staking in Defi. This platform even helps cryptocurrency holders to earn passive income from the coins they have. Defi introduces a specific method known as staking for those who want to have a passive income from cryptocurrencies. Learn the details below.
About DEFI
DEFI is a finance service platform that helps cryptocurrency holders to manage their coins well. Users can use this platform for a variety of transactions, including buying something online, transferring coins to other users, saving, and even investing. For an investment program, DEFI supports its users with the staking method.
About DEFI Staking
DEFI staking is a method where a cryptocurrency holder holds a certain amount of their crypto tokens. The purpose of this action is to earn passive income through DEFI. It works by letting a crypto tokens holder make a minimum balance of a specific cryptocurrency. In this case, the token holders can validate transactions and earn a reward in return. The protocol will pick the holders who get returns randomly. The more crypto a holder stakes, the higher chance that the protocol to pick them. This method becomes one of the most popular ways to earn a passive income because it uses fewer resources for PoW mining or Proof-of-work. Token holders also choose DEFI staking as an alternative to verify crypto transactions and add them to the blockchain. Imagine that the total investment on the staking DEFI reaches $21-23 billion. It shows that this method is a potential cryptocurrency investment.
The Benefits of Generating Profit Through Staking DEFI
One of the benefits of generating profit through staking DEFI is safety. This method is safer even compared to other traditional methods. The risks are also lesser than other crypto token investments. DEFI secures the staked crypto tokens using blockchain technology. This technology prevents a variety of investment issues, including corrupt practices. High interest is another benefit of earning profits through DEFI. The level of interest on DEFI is even higher compared to any traditional financial institution. DEFI can give a high interest because the process doesn’t involve any third party. You will also feel comfortable because you have complete control over your funds.
The Way to Earn Profit from Staking DEFI
So, how can you earn a profit from DEFI? The first thing to do is make a cryptocurrency deposit into a DEFI platform. You will get an Annual Percentage Yield or APY. Then, staking or holding your crypto tokens. Holding the crypto tokens doesn’t mean that you let the tokens stay. You are about to borrow the tokens from the network to help it validate transactions. You will earn interest as a reward from lending your tokens. The interest is coming from the networks. In this case, the networks assign a miner the right to validate a transaction in a certain stake of tokens. The system will automatically add tokens as a reward. Original investors receive a larger stake from this method.
Requirements to Invest Crypto Tokens at DEFI
You need to pass several requirements before investing your crypto tokens to DEFI. Ensure that you have the DEFI platform. Then, complete the minimum crypto tokens. It is a crucial requirement to establish a staking pool. You also need to decide the fixed amount of time you need to lock up your token for.
Factors That Generate the Staking Reward
Now, it is time to work to generate the reward or interest. You should consider several factors that generate the staking reward, including staking duration, the assets which you staked, inflation rate, and issuance rate. Investors can also use two different methods, which are the just take or staking strategies methods. In the just take method, DEFI allows you to stake your tokens in a particular liquidity pool. The function is to help them generate interest rates annually. The just take method is known as the simplest method to generate staking reward. You can keep your assets moving between pools. It is a strategy to maximize interest. In the staking strategies, you can use a specific technology such as Robo-advisers to generate more profit from the pools.
3 Different Staking DEFI Models
Stable Coin DEFI Staking Platform
This platform helps users to lend stable coins against crypto assets, such as bitcoin. Users can even lend stable coins from the protocol. The stable coin is coming from the farmers or liquidity providers who stake the crypto tokens. Then, other users can lend the staked crypto tokens. As a borrower, you should pay interest to this platform.
Synthetic Tokens Staking Platforms
The developer also develops certain DEFI protocols to handle synthetic assets. The assets are including fiat, stocks, and cryptos. Liquidity providers who stake their assets will also earn interest.
DEFI Staking Aggregators
Unlike other staking platforms above that can lend and borrow crypto assets, DEFI staking aggregators can’t do it. The main function of these aggregators is to help users who want to pool their assets and distribute them to the protocols with maximum yields.
Things That Makes DEFI Staking Platform Great to Use
Intuitive Interface
DEFI has an advanced interface. It is not the simplest one, but it is also not the most complicated one. The idea of the developer is to simplify the user’s experience. Let’s say you don’t have to manage the private keys, deal with sophisticated wallets, and easily withdraw the reward.
Security System
Indeed, you should know about DEFI’s security system. It is because you are about to invest your crypto tokens there. The good thing is that the developer guides you to get the well-audited DEFI protocols. The protocols will audit your smart contracts maximally. As a result, you can prevent any kind of exploit.
Higher Yields
This platform provides its users with the right protocols, although the competition among the DEFI protocols is high. The right protocols support you to help liquidity providers generate higher yields. The more comfortable users are to use this financial service platform, the more users who also want to use this platform come.
The point is that using the DEFI platform gives a lot of benefits. One of them is that you can learn how to invest your crypto tokens through the staking method. The DEFI Staking method allows you to earn more money.
