DeFi investment strategies

Decentralized finance (DeFi) covers financial services based on open-source blockchains. Bypassing centralized financial middlemen, anybody with an internet connection can fully control their assets.Investing in DeFi offers a few major options. In the end, everything comes down to risk tolerance. Here are four DeFi investment strategies to examine.


After a misspelling in the word “hold” in a 2013 crypto forum post outlining a “buy and hold” long-term investing plan, “hodl” became the term meaning hanging on to what you buy no matter what.

HODLing is one of the simplest strategies to develop a portfolio. While it does not make use of DeFi’s ability to generate passive income from crypto assets, it does rely on their value improving over time.

Borrowing and Lending Cryptocurrency

To borrow or lend crypto assets, you simply need to offer collateral. In a liquidity pool, a smart contract acts as an automatic digital “intermediary” to determine rates.

Liquidity pool lenders often expect to earn interest on their token loans. DeFi loans are typically “over-collateralized,” meaning borrowers give collateral in the form of crypto worth more than the loan itself.

But DeFi lending and borrowing isn’t simply about decentralized money markets: interest rates are usually very low. DeFi deposits yield 1-5 percent interest every 15 seconds. So, it is very profitable to invest in DeFi.

DeFi Staking and Yield Farming

Making crypto work is as easy as staking. By securing your idle assets, you help to ensure the safety of decentralized financial services. Most DeFi initiatives reward staking in the form of governance tokens, which may either be held as voting power or exchanged for other tokens. Staking your DeFi assets for an extended period will increase your earnings.

Profits from interest and staking prizes are maximized in yield farming.

As a result, yield farming is one of the riskiest DeFi strategies.

DeFi Indexes

DeFi Indexes are a simple approach to diversifying your cryptocurrency holdings.

In conventional finance, ETFs monitor the values of many assets, such as the S&P 500 ETF. 

The DeFi Pulse Index, for example, gathers the major DeFi initiatives. Another is the MetaVerse Index, which comprises the largest NFT protocols in DeFi. 

We’ve included some of the most popular DeFi investing techniques so you can put your new knowledge to use. By taking the time to learn about DeFi investment strategies, you can hope for an exciting few years ahead.

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