The launch of Decentralized Finance (DeFi) technology brought many changes at the economic level, convincing many people to join the crypto community.
And that’s not even surprising because it allows a lot of bank activity on the blockchain without the need to go through a third party.
In other words, you no longer need to wait for your transaction to be confirmed by the bank, nor do you have to worry about additional transaction fees.
However, the basis for the mass adoption of DeFi in recent years is not only the security and efficiency of the blockchain. An important role is needed to generate passive income (passive income).
How to Get Passive Income Through DeFi Platform
There are three main ways you can generate additional DeFi assets:
Staking cryptocurrency means locking your assets into the PoS consensus protocol. This will give you daily rewards/rewards, as long as you don’t use or withdraw your deposit.
And you don’t even have to check it every day because the prizes are self-collecting.
With the value of cryptocurrencies constantly increasing, many people are starting to use this method. Because it’s simpler than having to trade.
Yield Farming can also be called liquidity mining, you can generate rewards/rewards by owning crypto assets. For example, generating other crypto assets with your own crypto assets
Yield Farming will only run when Liquidity Providers (LPs) / Lenders place their crypto assets into liquidity pools (Liquidity Pools). These crypto assets can later be borrowed and used by other users.
Liquidity Pools are smart contracts that lock/contain funds from the lender. With the inclusion of crypto in the liquidity pool, lenders will later get rewards or interest according to the crypto they lend.
Decentralized Exchanges are a type of cryptocurrency exchange that allow direct peer-to-peer digital currency transactions to be carried out online securely and without the need for intermediaries.
Well, the mechanism is quite simple. You buy cryptocurrency when its price is low and sell it when its value increases. In reality, you need to check the market regularly because the value of cryptocurrencies changes from day to day.
But it should also be noted that you must be able to select a crypto project whether the project is good or not for the long term so that your assets continue to grow.