DeFi

Best DeFi Rates & Projects

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DeFi Yield Farming

DISCLAIMER

Respect all applicable local, national, and international laws when operating or engaging with a DeFi Platform. Content or activity featuring, encouraging, offering, or soliciting illegal activity may be prohibited in your jurisdiction. As the Blockchain is still in its infancy, we highly advise you to DYOR and familiarize yourself with its mechanisms as certain DeFi losses may be permanent – only invest what you can afford to lose. This article is for educational purposes only and shall not be constituted as Financial Advice

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What is DeFi?

DeFi is an abbreviation of Decentralized Finance and is an area in the crypto ecosphere that intends to reproduce financial products from Centralized Finance in a much more efficient manner. In doing so, it leverages Blockchain technology and aims to remove counter-party risks while allowing you to become your own bank. All of this is done seamlessly, allowing users to earn passive income while no centralized entity has access to a user’s funds.

How does DeFi work?

In the realm of DeFi, you can do much more than merely lending and borrowing. The prospects have matured way beyond that and all of this is done in a permissionless, anonymous and seamless manner. The following are some examples of this.
Depositing crypto into a protocol and earning yields. This includes proving liquidity thereby earning a proportion of the transaction fee.
Reaping benefits from staking programs where staking certain tokens rewards you with a farmed token.
Borrowing crypto anonymously on an open-sourced protocol with your crypto assets as collateral. The costs of doing so involve paying interest to the platform and the lender.

Lending crypto on open-sourced protocols, and earning interest in return.

Investing in tokenized traditional digital assets (e.g. commodities, forex, etc)
Hedging your portfolio via decentralized alternatives (e.g. DeFi insurance)
Trading permissionlessly on Automated Market Makers – executed via smart contracts
And much more!

How to Earn via DeFi

As the DeFi trend is surging, along comes lucrative opportunities of yield farming, staking, lending and borrowing. We’ve devised a comprehensive list of DeFi platforms that have returns worth your time – so sit back and relax, let your crypto work for you.

An Overview of DeFi loans

Here are some prominent characteristics of DeFi loans

Non-Custodial: All transactions are made via a Web3-enabled wallet like Metamask and Trust Wallet – smart contracts alone hold custody to your funds.

Permissionless: Anyone can borrow or lend on open-sourced protocols

Anonymity: Users retain anonymity as they are exempted from KYC due to the nature of the DeFi platform

Dynamic: Interest rates are determined according to basic economics, i.e. supply and demand. As the returns on borrowed capital exceed, this leads to a surge in borrowing demand and is met with an equivalent increase in interest rates.

Secure: Major DeFi protocols are rigorously audited by Blockchain security platforms (the most prominent being Certik) and the prevalence of smart contracts and automation ensures that all transactions are tamper-resistant. Moreover, the decentralized nature of such projects itself is relatively safer in comparison with centralized counterparts.

Perpetual: DeFi loans are lent out for any given period as long as they are paid back and collateralised by sufficient capital.

Free of intermediaries: The lending process itself is free of any unnecessary intermediaries and this is what makes DeFi more seamless and efficient.

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Best DeFi Lending Rates

Arguably the biggest DeFi use case to this date has been DeFi lending and borrowing. This helps long-term holders earn additional yields on their crypto with means other than natural portfolio growth. On the other hand, this allows prospective lenders to reap the benefits of trading with a higher portfolio than in their possession.

Nexo holds a strong interest in the DeFi community and is a centralized platform offering interest rates between 6-12% APR for a variety of digital assets and paid daily. Nexo is licensed and Nexo’s Mutual service allows you to hedge your crypto assets against Maker vulnerabilities and hacks by covering your assets with insurance for a fee.
The platform boasts of a hefty 12% annual return on stablecoins (as well as fiat) with returns for non-stable cryptos ranging between 8% and 3%.
AAVE is a market leader when it comes to DeFi lending. Offering the most diverse amount of loan types, the DeFi protocol was the first to incorporate lending and borrowing on open-sourced protocols. Aave supports 17 cryptocurrencies as of currently with plans to add more.
The protocol had initially made waves upon offering what’s known as ‘flash-loan.’ Such loans allows users to borrow an infinite amount of capital as long as it is repaid within the same block – allowing users to prevent their open trade positions from being liquidated. Unlike other platforms, AAVE offers loans on flexible as well as fixed terms. Lastly, its rates can also be insured through NexusMutual, therefore, allowing users to reduce their level of risk in a volatile market.
At the time of publication, the highest level of interest on stablecoins amounted to 15.42% for GUSD.
Venus is an algorithmic money market on the Binance Smart Chain and is designed for lending and borrowing. Users can earn interest on cryptocurrencies like Swipe, USDC, USDT and BNB.
The DeFi protocol allows users to maximise their yields by allowing them to borrow more digital assets via interest earned or to mint VAI (Venus’ very own stablecoin). The protocol is governed by its native token, $XYZ to ensure transparency and fairness.
Since Venus is built on BSC instead of Ethereum, users can partake in borrowing and lending programs without having to pay the hefty fee and transactions are executed almost instantly. To obtain accurate and tamper-resistant price feeds, the platform utilizes pricing oracles from ChainLink.
On the other hand, the interest rates for stablecoins are definitely attractive and the low fees on the BSC make the platform a no-brainer for prospective DeFi users that wish to park their stablecoins in return for monetary incentives.
dYdX is a decentralized derivatives trading platform that allows users to trade on perpetuals, margin and spot. Users can leverage dYdX to trade Ether on margin with up to 5x leverage on popular cryptocurrencies like Ethereum and Chainlink – its contracts have no expiry.
With that comes the opportunity for earning passive income and dYdX has satisfactory rates on non-stablecoin cryptos. The platform pays out interest depending on the number of seconds between depositing and withdrawing – earning interest is as easy as depositing funds to the site and has no lock-up periods.
Where DeFi lending platforms lack is paying out interest on deposited funds and this is where dYdX comes in. It aims to be the leading decentralized exchange for Ethereum users and hence is also user-friendly with a fairly straightforward interface.
The interest rates for stablecoins may not be as much on dYdX but they are relatively higher for other DeFi tokens in comparison with its counterparts. Popular choices include LINK, UNI and SUSHI with lending rates as high as 1.09% annually.

DeFi Yield Farming

One of the most hyped trends in DeFi is Yield Farming, i.e. the practice of using your funds to provide liquidity for a given pair of crypto assets in return for financial incentives. The monetary returns for doing so are denoted by APR (Annual Percentage Rate) or APY (Annual Percentage Yield) depending on whether the Yield Farming platform in question supports auto compounding.
However, Yield Farming does not come without its downsides and risks, as it is vulnerable to what’s known as ‘Impermanent losses.’ Impermanent losses concerns pertain to liquidity pools in DeFi and occur when the price deviates by a given % and results in your deposited token values decreasing due to a divergence in the price of the LP tokens. The Impermanent losses may be erased when the token prices rebalance to the price one initially staked at hence the term ‘impermanent.’ Similarly, upon withdrawing from the LP pool at distorted prices can result in permanent losses.

Why Yield Farm?

A Frequently Asked Question from those new to DeFi is why they should Yield Farm, the advantages are listed below.
Yield Farming has higher returns than merely lending your assets.
By providing liquidity for a given liquidity pool, users are entitled to receive trading fees – this varies per protocol. Certain protocols pay all or a pre-determined proportion of transaction fees while rewarding the remainder to its treasury.
Benefit from additional staking programs on Yield Farming platforms.
Yield Farming serves as passive income and enables liquidity providers to reap rewards other than natural portfolio growth.
If the price per token in the liquidity pool rises, the yield paid on your crypto adjusts accordingly and hence increasing the value of your portfolio.
Earning an additional farmed token allows you to diversify your investment.
Yield Farming by nature is open-sourced and hence promotes accessibility.

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Best DeFi Yield Farming Rates

Now that you know the benefits of Yield Farming, we’ve composed a comprehensive list of the most popular and lucrative rates one can earn while yield farming.
UniSwap is by far, the most common Decentralized Exchange on Ethereum and its market share equates to 19.3%. With $7.23B in Total Value Locked (TVL), UniSwap has reportedly generated over $1B in fees for Liquidity Providers. Among the various DeFi protocols, UniSwap has the highest percentage of transaction fees, i.e. 0.3% with plans to incorporate a protocol fee in the near future.
The hefty protocol fee amounts to lucrative APRs as with each swap, liquidity pools, and in turn, liquidity providers are rewarded with a transaction fee for ERC-20 tokens. The AMM has two major versions: a V2 and a V3.
The popular Automated Market Maker, Pancakeswap, was the first to make its debut on the Binance Smart Chain. Built around the theme of Pancakes and bunnies – the platform has rapidly increased in popularity with most DeFi enthusiasts being fairly familiar with it.
Pancakeswap has over $11B in TVL and rewards its users with CAKE in return for partaking in its staking programs. Rewards for providing liquidity for stablecoins vary around 8-10% while they are marginally higher for more volatile assets.
In return to rewards for Yield Farming paid out in CAKE, liquidity providers are also rewarded with a proportion of a transaction fee, in this case being 0.17%.
BeefyFinance is a DeFi protocol focusing exclusively on Yield Farming and has been the first to make its debut as a multi-chain platform in its category. The protocol is a Yield Farming Aggregator which means it allows users to maximise their returns from yield farming. By automating its users’ investments, it also minimizes manual interaction with DeFi that can be risky in the constantly evolving world of DeFi.
The Yield Optimizer allows you to partake in Yield Farming activities on popular AMMs on the given chain and automatically compounds your assets to maximise returns. The protocol is able to achieve this by distributing the fees within the network equally among vault participants, therefore, making it more efficient than its rivals.
Hence, owing to its nature, it boasts of much higher returns. However, do keep in mind that it charges a 4.5% fee on all harvests: 3% of which is distributed back to the reward pool – awarded to BIFI holders – 0.5% to the treasury, 0.5% for the strategist that designed the vault and 0.5% rewarded to the person executing the harvest function

Other notable DeFi Yield Farming Protocols

Other popular Yield Farming protocols that may be of interest to Yield Farmers are the following:
Where UniSwap may have been considered as an AMM for exclusive insiders, SushiSwap holds its reputation as being community empowered. What makes it more efficient in comparison with alternative Yield Farming Protocols is that nearly every token on Sushi is natively yield-bearing.
Launched in 2020 with an aim of providing immediate liquidity in its function as a Decentralized Exchange for stablecoins. Its liquidity pools are open-sourced and open to market participants. Curve has a long list of stablecoins and maintains strong APRs between 1.9% and 32%. It is important to note that impermanent losses are not realized for stablecoins unless they lose their peg – a rare event in the world of crypto.
Yearn Finance is a group of products in DeFi that is designed to generate yields and currently operates on Ethereum. The protocol is maintained by various independent developers and is governed by its native token, $YFI.

Conclusion on Best DeFi Rates & Projects

DeFi is booming. The opportunities to reap rewards from various protocols are very lucrative. From investing and borrowing, to lending and saving, DeFi holds enormous potential and could reshape our entire financial ecosystem. However, do bear in mind that the mind-blowing APRs are in return accompanied by an equally proportionate risk. DeFi is vulnerable to hacks, glitches and bank runs, so don’t forget to DYOR. If you want to learn more, be sure to connect with our top DeFi influencers who can educate you and also help you get exposure to your project.

Looking for a DeFi marketing agency? Crowdcreate is a full service strategy & marketing firm focused on crypto, DeFi, and NFT projects. Book a call with our team at your earliest convenience and let us discuss the marketing strategy that’s tailored to your preferences.

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