You work hard for your money (crypto), why not make your crypto work even harder for you?

In this post, I would be sharing with you the top 3 ways you can put your crypto assets to work in DeFi and build your portfolio on autopilot.

Top 4 ways to put your crypto assets to work for you

DeFi makes it possible for anyone from anywhere in the world to enjoy any financial services in a trustless and transparent manner.

Below are some of the most popular financial services currently supported in DeFi which you can take advantage of to effortlessly generate passive and residual income with your crypto assets.

  1. Lending
  2. Staking
  3. Liquidity mining
  4. Yield farming

Please note that this is not an exhaustive list of all financial services available in DeFi, but only those which allows you to put your crypto assets to work and earn passive income.

With that out of the way, let’s discuss how to leverage these DeFi products and put your money to work.

1. Crypto lending

You can lend your crypto assets on either the centralized or decentralized crypto lending platforms to earn interest.

These crypto lending platforms function just like your traditional bank.

They allow you to deposit your crypto assets on their platform, which they then lend to individuals and institutions on interest.

A good portion of their profit is then shared with you in form of interest on the deposited amount.

Some of the most popular DeFi lending platforms that you may want to consider using include, but are not limited to:

  1. Aave
  2. Compound Finance
  3. Cream Finance
  4. Anchor Protocol
  5. Venus

Click HERE for a more complete list of all decentralized crypto lending platforms across all chains.

Centralized crypto lending platforms you can consider as alternatives to the above include:

  1. Celsius Network
  2. BlockFi
  3. Nexo
  4. Crypto.com
  5. Hodlnaut

Whether you decide to use a centralized or decentralized crypto lending platform depends on your risk and privacy preferences.

However, both work very great and centralized platforms seem to offer better interest rates.

Click here to check out all crypto lending platforms and compare their interest rates for the most popular cryptocurrencies.

2. Staking

Staking is the process of locking up your funds in a proof of stake (PoS) blockchain to be able to participate in transaction validation and governance for a reward.

And if you don’t want the responsibilities that come by being a validator, you can delegate your crypto assets to a validator who shares their staking reward with you.

Either way, it’s all the same. You’re putting your crypto asset to work for the network and growing your stack of tokens with the daily staking reward.

Furthermore, many new crypto projects offer staking as part of their tokenomics primarily to:

  • attract new investors who’re chasing high yields.
  • reward long term investors for their belief in and commitment to the project.
  • reduce circulating supply and make the token scarcer, which can help grow or maintain its value.

These projects usually offer very juicy APYs which makes them attractive to investors looking for high yields.

Your job is to do your own research, identify the tokens with the potential to grow and that have good staking APY. Then stake and forget for the long term, and watch your portfolio grow accordingly.

Click here for a comprehensive list of the top staking platforms across all chains.

3. Liquidity mining

Liquidity mining is the process of depositing your crypto asset(s) in a liquidity pool on a decentralized exchange to earn rewards.

The reward usually comes in: a share of all trading fees generated in the pool, and/or the platform’s native token.

Again, only invest in liquidity pools of projects with solid fundamentals and potential to grow.

This way you’re confident the value of the crypto assets deposited in the pool will not go to zero. And if you remain in the pool long enough, the earned rewards will offset any impermanent loss.

4. Yield farming

Crypto lending, staking, and liquidity mining are all aspects of yield farming, which is a way to generate even more rewards with your crypto assets.

However, what we normally refer to as yield farming goes a step further by allowing you to stake your LP (liquidity provider) token to earn extra rewards.

Your LP token is like a receipt you get when you deposit your crypto asset(s) in a liquidity pool.

Several DeFi protocols and yield optimizers operate “farms” where you can deposit your LP token and earn their native or any other supported token in addition to your liquidity mining rewards.

This way, you’re earning from almost 3 different sources with one investment:

  1. You earn from the (potential) price appreciation of your crypto assets.
  2. You earn a share of all fees generated in the liquidity pool.
  3. You earn a new token in the farms which could also appreciate with time.

And with compounding, you grow your wealth faster.

So it’s always a good idea to look for liquidity pools that allow you to stake your LP token to farm other tokens. If they offer auto-compounding, that’s even better.

4.1 My favourite platforms for liquidity mining and yield farming

Because of impermanent loss, I prefer to invest in liquidity pools that allow me to stake my LP token to farm the platform’s native or other supported tokens.

The following platforms allow me to do just that:

  • Biswap: For high APY farms, auto-compounding, and high-quality tokens. Even their native token single-sided staking is very attractive and gives you other privileges.
  • Beefy: For high APYs and auto-compounding. This is my primary hunting ground for the latest and high APY farms across multiple chains. Extremely risky degen play.
  • Mdex: For high APY farms. You will not like to stake their native token (MDX) because the APY is stupidly low. But their farms are very lucrative.

Of course, there are hundreds of other DEXs on BSC and other chains with very good liquidity mining and yield farming opportunities.

You just have to look around, and you’ll find pools that suits your style and investment strategy.

What are the risks of the above investment strategies?

Everything comes with a risk, and the above ways of putting your crypto to work for you are no exceptions.

Like every other crypto investment, the following risks are present with all of the above ways of putting your crypto assets to work.

  1. Token price goes to zero or at best dumps below your buying price and never recovers. And your rewards APY may be too low to offset the loss in token value.
  2. Protocol or platform can be hacked and you lose your money with little to no hope of being reimbursed.
  3. The project developers or team could disappear with your deposited funds one way or another.
  4. The project could fail like every other business. After all, not every project or company will survive and thrive forever.

You could easily lose everything or a significant value of your investment due to these risks and you should be aware of them.

Conclusion

If you want to be financially independent and build your crypto wealth faster, you must find a way to put your crypto assets to work.

The goal is to let every coin or token reproduce itself in multiples as much as possible. And HODL long enough to enjoy the (potential) price appreciation of both the original assets and their offerings.

And the top 4 best ways to do this as discussed in this article are lending, staking, liquidity mining, and yield farming.

What other ways do you put your crypto to work in DeFi? Share with us in the comments section below.