Decentralized Finance: Earn high returns from cryptocurrencies safely and easily. Celia Zeng, DeFi Asset Manager at capitalExplains how it works.
Decentralized finance, also known as DeFi, has received a lot of interest from investors due to the increasing global reach of cryptocurrencies.
What is DeFi and why do we hear so much about it these days?
DeFi is an umbrella term for financial products and services that anyone with an Internet connection can access. The goal of DeFi is to eliminate the third parties involved in all financial transactions and create an entirely new financial system, completely independent of traditional finance.
In the past year, DeFi has actually increased in speed. The total closed value – the total value of assets held in transactions – rose from $700 million in December 2019 to more than $200 billion in early 2022. That’s Greece’s GDP in 2017. That’s probably why you heard last year Also about DeFi. It is developing into an important branch of economics in a very short time.
So if you want to invest in DeFi now, I have collected some tips for you below which I have learned as a DeFi asset manager. here we are!
Invest in cryptocurrencies with a large market capitalization
According to CoinGecko, there are more than 13,000 different cryptocurrencies. Most of these projects will probably not be successful. Think of market microtokens as risky startups – they often come and go overnight.
So if you want to play it safe, invest in cryptocurrencies with a large market cap. One such example is Bitcoin, which still represents the largest market capitalization. Cryptocurrencies with a large market cap have usually been around for a long time and have proven themselves.
Decentralized Finance: The Benefit Is Essential
There are a number of cryptocurrencies working on promising projects that could revolutionize the world of FinTech. So if you want to evaluate the value of a crypto project, you need to take a look at its usefulness. In other words, ask yourself, “What real-world problem can this project solve?”
The benefit of Bitcoin is clear – it is meant to be a decentralized digital currency. No organization, company or individual controls the protocol. Although its usefulness is obvious, bitcoin is on track to become the main currency of the internet and maybe one day for the entire world.
Ethereum is considered one of the best cryptocurrencies in terms of utility due to the booming NFT market. Both NFTs and DeFi support contributed to the rapid rise of the network. You can easily buy Bitcoin and Ether from all cryptocurrency exchanges.
It is important to understand the interest behind the projects. However, it is also true that many projects are of absolutely no use. A recent report showed that half of the cryptocurrencies in the top 100 by market capitalization are of no use. So do your research before investing in tokens not listed above.
Earn high returns on your cryptocurrencies
The beauty of cryptocurrencies is that you can’t just enjoy the appreciation that comes from holding cryptocurrencies. You can also earn high returns from it in a safe and easy way.
How does this all work? Most major cryptocurrency exchanges, such as Block-Fi, Capital or Coinbase, allow you to buy cryptocurrency with fiat money. Then you store this on the platform. Now you can sit back and get high interest rates.
Staking offers cryptocurrency holders a way to make their digital assets work for them and earn passive income without having to sell them. You can think of staking as the crypto equivalent of a high-yield savings account.
Ethereum (ETH) is one of the most popular cryptocurrencies today, although it is not a cryptocurrency per se. Staking ETH requires a minimum of 32 ETH. The rewards vary, but the return on staking ETH is believed to range from 5 to 17% annually.
Decentralized finance and stablecoins
When it comes to fixing stablecoins, USDT and USDC are the most suitable options. One of the main benefits of betting on these stablecoins is the interest rate. You can get up to 12% APY. This makes it possible to beat inflation while making a profit.
In addition, staking USDT and USDC are safe. As the name suggests, these stablecoins are pegged to the US dollar. This makes it less volatile than typical cryptocurrencies. So if you are looking for a secure way to share cryptocurrencies, then stablecoins is the right choice.
The high interest rates of stablecoins allow you to invest in global centers. This finally gives the individual investor the opportunity of a lifetime to invest in projects that were previously only available to hedge funds and the wealthy.
Cryptocurrencies will only grow this year, so the possibilities in the DeFi space seem almost limitless. To be a part of this digital revolution, I will buy some bitcoin, ether and stablecoins and share them on a crypto exchange. This is how you generate passively high returns.
About the author
Celia Zeng is the DeFi Asset Manager at Capital. Capital simplifies investing in the crypto world while leaving out the unnecessary noise and drama that comes with it.
Not giving an opinion
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