Earning interest is becoming possible once again – finally. In the world of traditional finance interest rates have been dropping for over 20 years. Once upon a time it was possible to get 10-15% interest rates through your banks, but those days are long gone.
At present you’ll be lucky to get more than 0.5%, and you’ll have to go through lots of complicated terms and lockup periods just to get that! As we observe the demise of the traditional finance sector, something new has risen from the ashes – Decentralized Finance (DeFi).
DeFi is a new opportunity for anyone, anywhere in the world, to take control of their own money and earn incredible rates of return. It’s all made possible by cryptocurrency and distributed ledger technology.
The growth of DeFi
DeFi has been steadily growing for years now, but more recently has experienced explosive growth and more innovations have been made and word has spread. People are starting to realize that they can control their own finances and start earning real interest using DeFi. Coinmarketcap has even recently added a DeFi page where you can track the performance of DeFi projects!
DefiPulse shows the huge spike in value locked in DeFi over the last couple of months which clearly illustrates how popular its becoming. People are even finding innovative ways to increase their earnings such as Yield Farming, which is a tactic used to take advantage of DeFi offerings in conjunction with bonuses and cashback schemes to generate absurd rates of return, such as 100% APR.
DeFi projects to watch
So if you’re interested in earning a bit of extra crypto, what are the DeFi projects you should have your eye on? Here are a few of the hottest ones right now that might interest you.
DeFi Money Market (DMG)
DeFi Money Market (DMM) is a permissionless and fully decentralized protocol to earn interest on Ethereum digital assets, backed by real-world assets. You can deposit ETH, DAI and USDC and start earning 6.25% APR today.
DMM is a unique offering because their interest rates don’t fluctuate, so you always know what you’re going to get. Here’s how it works:
- You deposit DAI, USDC or ETH and receive DMM mTokens – a cryptocurrency equivalent which can be exchanged back to your crypto of choice at any time
- The deposited crypto is used by the DMM foundation to acquire real world assets that produce income. You can view the acquired assets on-chain.
- The assets pay a consistent rate of interest, which is returned to the DMM ecosystem.
You can view the real world assets here to see how it works. The real-world assets backing DMM include vehicles, property and other “hard” real-world assets, which are income-generating. The assets pledged serve as collateral for DMM and are secured through a first lien, senior-secured position, meaning it is above all other rights and have first priority in the event of lack of payment.
The DeFi Money Market governance token (DMG) is vital to this ecosystem. DMG holders have voting rights, which enables them to contribute to the decisions that bridge the gap between crypto and real-world assets. DMG is a critical component that will engender broad participation and eliminate centralized control risk.
Compound is a decentralized lending platform where anyone can borrow or lend cryptocurrency. Lenders are able to deposit their cryptocurrency to earn interest.
COMP is an ERC-20 token that facilitates decentralized governance of the Compound protocol. COMP token holders can propose and vote on changes to the protocol.
Compound distributes around 2,880 COMP every day to users of the protocol based on the percentage usage.
Known as ‘The Money Market Protocol’, Aave is an open source protocol that can be used to create money markets. In other words, it matches crypto lenders and borrowers and provides lenders the opportunity to earn interest on their crypto holdings. Aave offers uncollateralized loans and flash loans too.
The LEND token provides holders with lower fees and will soon also act as a governance token.
The Daily Chain
*This article has been sponsored. The Daily Chain encourages you to carry out your own research before you make any form of investment and educate yourself about how to stay safe in the crypto space.