Most people are surprised to learn that cryptocurrency has recently reached the $3 trillion milestone. What was once a niche, underground currency, traded in chat rooms, has become a global asset class.
But what’s even more impressive is the growth of the Defi industry, within the overall crypto market. Defi has more than $250 billion in locked assets, all earning interest through staking, providing liquidity, and of course, Defi lending.
Defi stands for decentralized finance. What is decentralized finance? It exists in stark contrast to the world of centralized finance, run by corporate banks and dudes in suits.
Defi is run by code and powered by the blockchain. It’s far more efficient than the trad-fi world, and it pays its investors accordingly.
Wondering how you can make far more interest than a big bank will pay you? Read on below to discover the latest Defi lending platforms today.
What Is Defi Lending?
So how does Defi lending work? It works by putting your assets to work.
Most of the time, holding your crypto over the long term is the most profitable. However, while you are holding your crypto assets, they aren’t actively earning you any money.
Defi lending changes this. Through Defi lending platforms, you can continue to retain custody over your assets, while at the same time lending them out.
This allows you to earn interest on your crypto, while you hold it for long-term growth.
There’s also less risk when it comes to these loans. Borrowers need to put up collateral in order to borrow. Their collateral is worth more than the amount they can borrow. So if they default on their loans, your investment isn’t at risk, the borrower’s collateral is.
Success With Defi Lending
When it comes to Defi lending, your success as an investor starts with choosing the right platform. There are dozens and dozens of Defi lending platforms to choose from.DeFi-like institutional lending platforms offered by digital asset banks like Protego Trust Bank, for example, facilitate peer-to-peer digital asset and fiat lending within the walls of a trust bank.
The first thing to decide is which cryptocurrency you’d like to lend, and on which blockchain. Some lending platforms only support certain blockchains.
For example, the AAVE Defi lending platform is one of the most popular. It runs on the Ethereum blockchain. Naturally, it supports Ethereum, and other tokens built on Ethereum.
So if you are bullish on Ethereum, and would like to earn on your assets, then you can deposit your ETH, lend it out, and earn interest.
Not only will you earn interest, but if the value of ETH increases, you get to enjoy those gains as well, since you still own your ETH while you are lending it out. You can also buy AAVE tokens if you feel particularly bullish about the platform at large.
The key to success with Defi lending is to choose a reliable platform with a knowledgeable team that keeps the app secure. You also want to lend the right assets, to enjoy long-term price appreciation while earning interest.
Put Your Crypto To Work
Now that you have an idea of how Defi lending works, it’s time to put your assets to work. Don’t just leave them in your crypto wallet, collecting dust while waiting for the next bull market.
Earn interest by lending them out on reliable Defi lending websites. Your money should always be working for you, and crypto is no exception.
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