Lending
Providing crypto assets to decentralized platforms in exchange for interest payments. It's similar to traditional lending but implemented within the DeFi ecosystem.
Overview
DeFi lending offers a low-risk, automated way to earn passive income by lending crypto assets on platforms like AAVE, Compound, Venus, and Maker DAO. With typical APYs ranging from 5% to 10%, it's a conservative yet profitable strategy that mirrors traditional lending in a decentralized environment. Ideal for those looking for steady, low-effort returns, DeFi lending requires minimal user involvement while providing interest earnings, making it an attractive option for investors looking for safe and stable income from their crypto assets.
Risk and Reward Profile
User Involvement: Low
Potential Returns: Conservative, offering steady interest payments.
Potential Risks: Mainly smart-contract risks and possible changes in the lending protocol.
How It Works
Users choose a DeFi lending platform like AAVE, Compound, Venus, or Maker DAO.
They deposit their crypto assets into the platform, which then becomes available for borrowing by other users or for various DeFi activities.
In return, lenders receive interest payments, typically calculated based on the demand for the borrowed assets and prevailing market rates.
The process is largely automated, with smart contracts handling the allocation and distribution of interest.
FAQs
Last updated