These strategies are an integral part of the DeFi ecosystem, enabling users to grow their capital. Our platform applies these basic strategies to help you increase your wealth.
- Staking: The process of locking cryptocurrency in a wallet to support the operation of a blockchain network and earn rewards.
How It Works:
Staking is a key component of many blockchain networks, especially those using the Proof of Stake (PoS) consensus algorithm. Users lock their cryptocurrency assets, helping the network validate transactions and maintain its security. In return, they receive rewards in the form of new tokens.
Example: Imagine you stake 10 ETH on a platform. The average annual yield is 5%. Over the course of a year, your staking could earn you 0.5 ETH as a reward. If the value of ETH increases, the overall value of your assets will also rise.
- Farming:
The process of providing liquidity to decentralized exchanges or protocols and earning rewards in return.
How It Works:
Farming, also known as liquidity mining, involves providing funds to liquidity pools on decentralized exchanges (DEX). Users who provide liquidity earn rewards in the form of platform tokens and a share of the transaction fees.
Example: You add 1 ETH and an equivalent amount in DAI to a liquidity pool on Uniswap. In return, you receive liquidity tokens (LP tokens), which represent your share of the pool. You can earn fees from every transaction in the pool and additionally earn platform tokens as a reward.
- Lending:
Lending cryptocurrency to other users or protocols in exchange for interest.
How It Works:
Lending allows users to provide their cryptocurrency assets for borrowing by other users. Lenders earn interest on the funds they provide, while borrowers can use the borrowed funds for their own needs.
Example: You lend 10,000 USDT on the Aave platform. The users who borrow your funds pay 8% annual interest. At the end of the year, you receive 800 USDT as interest.
- Liquid Staking:
Liquid staking allows users to stake their tokens while simultaneously gaining access to liquidity by representing their staked assets with new tokens.
How It Works:
Liquid staking enables users to earn staking rewards while still using their staked assets in other DeFi protocols. Users receive liquid tokens representing their staked assets, which can be used to generate additional income.
Example: You stake 5 ETH on a platform that offers liquid staking. In return, you receive 5 stETH (staked ETH), which you can use to participate in other DeFi protocols, such as lending or farming, thereby increasing your overall earnings.
- Re-staking:
Re-staking is the automation of the staking and rewards process, allowing users to automatically reinvest their rewards to increase overall earnings.
How It Works:
Re-staking allows users to automatically reinvest the rewards they receive from staking back into the staking pool. This enables the compounding of returns, maximizing profits without the need for manual management.
Example: You stake 1,000 tokens on a platform with an annual yield of 10%. At the end of the first month, you earn 8.33 tokens as a reward. Instead of withdrawing these tokens, they are automatically reinvested. In the second month, you are now earning rewards on 1,008.33 tokens, which increases your overall yield.