How to make money on DeFi in 2022 and avoid mistakes?

In previous articles , we talked about what are the ways to make money in the cryptosphere, as well asstep by step guide for beginner crypto traders . Today it's time to get acquainted with the decentralized finance (DeFi) market, which opens up many opportunities. We share how to safely use niche tools to increase profits.

How to make money on DeFi

Decentralized finance has flourished for the last 2 years. For investors with any size of investment capital, DeFi provides many passive income opportunities. Yield farming or betting are the two biggest earning options.

DeFi platforms have provided users with ways to borrow, hold, lend or trade cryptocurrencies without any of the traditional bureaucratic procedures inherent in financial markets. This level of popularity makes the best DeFi coins a solid investment option in the eyes of many.

The key concept of decentralized finance is the absence of the need for intermediaries. There is no place in the DeFi arena for traditional banks with high fees and interest rates that financial institutions can hold as market monopolies.

In addition, decentralized finance allows users to remain anonymous and “make” money work efficiently.

The rise in popularity of DeFi can be seen in a chart that shows the total value of assets locked in projects in this segment:

What Decentralized Finance (DeFi) Really Means

Decentralized finance (DeFi) is an emerging financial technology in the blockchain space based on distributed ledgers, just like cryptocurrencies. The model aims to remove banks' traditional control over money as well as over financial products and services.

DeFi allows individuals, traders, and companies to perform independent financial transactions using blockchain technology, eliminating the need for an intermediary. This is achieved through peer-to-peer (P2P) networks that use security, connectivity, and advanced software and hardware.

Two great ways investors can take advantage of DeFi are through staking and yield farming.

What is productive agriculture?

Profit farming, also known as liquidity mining, is a great way to profit from crypto assets. In a sense, growing crops is another level of high risk, high reward stakes.

Using the power of smart contracts, DeFi Yield farming involves lending funds to others and receiving generous rewards in return. The rewards are usually distributed in the same DeFi token, according to a formula known as Annual Percentage Income or APY. As more investors participate in the same liquidity pool, the APY rate decreases.

Farming is a competitive DeFi area where farmers are constantly competing for the best token farm income.

What is staking?

Staking has been a favorite feature for investors to make the most of their crypto assets. The "stake" of your assets means that you will be rewarded as a percentage over time. This is possible thanks to a "stake pool" that can be compared to a traditional savings account with interest (only with a much higher interest rate).

The reason you get rewarded for staking your tokens is because the blockchain uses tokens. To do this, the system uses Proof of Stake, a consensus mechanism that ensures transactions are verified and secure without a bank or other intermediary. If you choose to participate in a staking pool, your cryptocurrency will start contributing to the same process.

Usually, the more crypto assets an investor invests, the higher the chances of being selected as the validator of the next block.

Income Farming vs. Staking: Which Should You Choose?

Adrenaline of risk and knowledge of cryptography are usually the determining factors when choosing between farming or staking crypto assets. All in all, we hope this quick guide to growing and staking has helped you make an informed decision.

Betting and farming are still fairly new passive income models compared to traditional financial institution models. These terms are closely related to each other, and stakes are often seen as a branch of income farming. Each strategy involves holding cryptocurrencies for rewards and allows investors to take advantage of the DeFi ecosystem.

Problems of the decentralized market

Most of the most popular DeFi protocols do not yet support all languages. For example, among the top 5 decentralized protocols, only one - Uniswap - is truly multilingual. This may reduce the number of active users of the platforms.

There are other hidden pitfalls preventing potential investors from entering the DeFi market. Among the pitfalls are the following questions:

Complex technical component. Entering the DeFi market can be difficult for a non-tech savvy user.

Lack of technical support in local languages. If investors need support, they will have to submit a request in the native languages of the project. Moreover, the language barrier could lead to potential losses if the investor misunderstood all the information.

Limited functionality. Users often need to use third-party resources and tools, which entails additional operating costs.

With the growing impact of these problems, the DeFi market has begun to generate projects that offer solutions. One of such projects is BaksDAO. The project team has worked out the main pain points that users face when entering the decentralized finance market.

How BaksDAO helps avoid the pitfalls of DeFi

BaksDAO is a multifunctional decentralized financial platform with its own BAKS stablecoin and BDV governance token. Aiming to become a global player, the project runs on the Binance Smart Chain (BSC) blockchain, which provides high throughput and low fees. The security of the platform was confirmed by Solid Proof experts during the audit.

Among the advantages of BaksDAO are the following features:

An intuitive and user-friendly interface with which even new players can enter the DeFi market and start earning.
Transparent asset management tools. BaksDAO developers emphasize that it is possible to make a profit on the platform while keeping control over assets in one's hands.
BaksDAO opens up many opportunities for its users. Among its features is the ability to earn money by issuing loans. Also, users can take open payday loans in BAKS with low interest rates and exchange assets.

At the same time, the developers of BaxDAO formed a platform for the development of the project in advance thanks to well-thought-out investment schemes and social actions. For example, the team distributes about a quarter of the project's profits to eco-initiatives. This fact puts the project among socially significant projects.

BaksDAO makes it easy to enter the market by breaking down the language barrier and bringing together various services under the roof of a multifunctional platform with an intuitive and user-friendly interface.

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