Here Are The Best Ways To Earn Interest In DeFi [2020]

What is DeFi?

If you don’t already know, or are having a hard time keeping up with all these new crypto-terms, you’re not alone. But don’t worry, we’re here to help.

Lending vs Staking

Staking cryptocurrency and utilizing a lending platform with a lending protocol to earn interest both generate the same results, but they have inherently different approaches and methodologies:

  1. A Lending Protocol is a blockchain protocol executed by a smart contract to lend out an asset to a “borrower”. Everything is done on-chain, so the typical lender doesn’t really have to worry about the back-end tech stuff too much. Just hold your digital asset in the platform’s wallet and a smart contract will do the rest.

What’s the difference?

Generally, people associate “staking” with the Proof-of-Stake consensus protocol, but more broadly, staking is the action of holding cryptocurrency in a wallet to support the operations of a blockchain network. When staking cryptocurrency, you are essentially opting to stake (generally a project’s native token) to earn rewards for your contribution.

Crypto.com (CRO Token)

Crypto.com is a huge project that has plenty of potential solely as a lending protocol, but they also offer a plethora of services. This isn’t always a plus, but Crypto.com has a decent amount of followers, and their execution is both well-intentioned and effective.

SwanFinance

SwanFinance is an up-and-coming DeFi project that can earn you 20% interest per year— currently the highest in the game. Falling under the “lending” DeFi sector, SwanFinance pays out interest on staked SWAN and on deposits of other cryptocurrencies, such as BTC, ETH, XLM, and USDT, through a smart contract. SwanFinance has mapped out an entire ecosystem of fintech services. In fact, SwanFinance features most of the current DeFi services and combines them all into one easy-to-use platform.

Swan Finance Ecosystem

UniSwap

UniSwap has been the talk of the summer, currently ranking #1 by a whopping 19% at the time of this writing on defipulse. For good reason too, UniSwap has offered something so vastly innovative, that it probably needs a separate article dedicated to it. So, for the sake of your time, we’ll summarize.

Balancer

Balancer is an AMM (automated market maker), and a non-custodial portfolio (and portfolio manager). Described on their website as “a protocol for programmable liquidity”, they also provide swapping, trade simulation and optimization, private liquidity pools, and more.

MakerDAO

MakerDAO (you’ve probably heard of this one) flaunts an ecosystem of DeFi services. A brainchild of the Maker Foundation, MakerDAO has quite a reputable team. With stablecoin Dai and governance token MKR, MakerDao comes in a close second with $1.82B locked at the time of this writing.

Compound Finance

Compound is an interest rate protocol built to be integrated into other platforms. According to their website, the Compound protocol is “built for developers, to unlock a universe of open financial applications”. In this way, Compound is similar to UniSwap, whose DEX protocol is also open-sourced — having been utilized by copy cat projects since its inception.

app.compound.finance

Conclusion

It’s always important to do your research on a project you’re interested in, especially in the DeFi space, where so many scammers and Ponzi schemers are just waiting to jump on the opportunity of a crypto-related craze. Do your research, check out the founders, give their websites, DApps, and DEXs a look over before using them. It’s also equally important to ask around on Twitter, Reddit, Telegram, etc. to get an idea of what others are saying about a project. Stay safe, and happy staking!

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