There are thousands of projects and protocols here and there in the crypto space, but two things stand out. One is Bitcoin because it has real actual value that a lot of people believe in, and the other is decentralized finance (DeFi) which helps people earn a lot of the yield. In this article, we will take a look into DeFi, useful tools to use and what protocols to use to generate passive income.
There are many different DeFi protocols that are now spread out among different chains. This means you have even more options now compared to back when Ethereum mainnet was the only DeFi chain to use. By the way, among all the chains available, Phantom and Avalanche are some of the best for DeFi investing.
Best DeFi Protocols to Earn Passive Income On-Chain
This is a brand new DeFi protocol launched just a few days ago and it’s already amassed over $800 million of total value locked (TVL) – this is a massive DeFi protocol. The way Yeti finance works is you can currently earn about 40% interest on your deposits of the Yeti USD (YUSDC) stable coin. So this is a stable coin pegged to $1. To get the YUSDC, you have to deposit collateral. Yeti finance accepts a number of different types of collateral which is a cool thing about this protocol.
You can deposit Avalanche (AVAX), USD Coin (USDC), Ethereum (ETH), Bitcoin (BTC), and Trader Joe (JOE). In return for depositing these assets, you get the YUSDC which you can stake for about 40% interest currently. Additionally, you can also stake the Curve (CRV) liquidity tokens if you add liquidity for the YUSDC. The YUSDC pool is currently the largest on Yeti finance with $400 million of TVL which will also get you about 40% interest.
This DeFi protocol has been another trendy DeFi protocol. You can earn about 10% APR interest on this if you’re depositing a number of different stable coins. Stargate acts as a bridge to help you get from one blockchain to another blockchain. For instance, you can move assets from AVAX to Polygon (MATIC) to Binance Smart Chain to Ethereum (ETH)Chain, to Phantom (FTM) Chain, and so on.
Whenever people use Stargate to bridge assets from one blockchain to another, there’s going to be a small fee that goes to the liquidity providers. This is where this 10% interest is coming from. The interest rates used to be as high as 20% but have been reduced recently for purposes of maintaining the stability of the pools. Nevertheless, Stargate finance still has over $600 million of total value locked (TVL) in there. This is an easy way to earn some additional interest on your stable coins.
This is a booster protocol built on top of Curve finance, which is another DeFi protocol on which you can add liquidity. You can stake the liquidity with Convex finance to get an additional boost on that. Convex finance users get 10% to 12% interest on their cryptocurrencies. For example, the USDT/BTC/ETH tricrypto pool will give you about 11.5% interest.
Vector finance is built on top of Platypus finance, which is a competitor to Curve finance. They essentially give you some lucrative yields – about 8% to 10% on stable coins like DAI, USDC, USDT, and so on. They also have new Trader Joe (JOE) pools for liquidity where you can get as high as 50% interest on the USDC/AVAX liquidity pool. The reason these rates are typically high is that they’re built on Platypus finance.
Platypus finance is essentially a decentralized exchange (DEX), similar to Curve finance. They give you a base APR rate which is mostly average. They then give you a boosted rate if you lock up some Platypus tokens with them. For example, if you deposit $10,000 of USDC, you will get about 3.4% interest. However, if you decided to stake $1000 worth of Platypus tokens with them, you would get about 13% interest.
Many people don’t want to lock and stake up their tokens for a month and so Vector finance is built on top of that. It aggregates these periods which allows you to enter and exit these staking pools at any time. Vector finance has about $200 million of TVL.
Are DeFi Protocols Profitable?
On DeBank, you can find a large number of profiles of DeFi degens and whales who know what they are doing on-chain. Some of them have over $50 million sitting in more than ten different protocols, earning passive income. Some of these whales earn $200,000 on a daily basis. This is much more than a majority of people earn in a year. There is money to be made in decentralized finance if only you can understand how it works. On the other hand, the risks are also real. Therefore, remember, always do your own research before investing in any protocol.
Research Tool: DeBank
DeBank depicts a great website that shows a lot of crypto wallets. You can go through the web through social rankings and just look through all of the profiles present. You can also see all of the DeFi protocols that different people are interacting with. One of the great methods of making it in traditional financial investment is copy trading from experts. And therefore, if you are a noob or don’t understand DeFi very well, you can copy these people who are making millions of dollars per day as passive income.