Bitcoin Forum

I just came to be aware of a new concept (to me) in the crypto space called Decentralized Finance (DeFi). It aims to offer the services of classic financial institutions through smart contracts and blockchain.
One of the use cases is to earn interest, as one would expect in a bank.

I just want to know your critical views whether one should involve is such or not. Would like to know if anyone of you used such platforms?
Many hodlers' coins keep on lying and this might be an additional source of income for them.

Ps: I am not talking about any Ponzi's that claim to multiply your deposits.

Decentralised Finance, or DE-FI for short is basically the new biggest thing in crypto, and I was actually very interested in it due to how much noise it's caused.

They work very well, and basically takes everything in the finance industry to a decentralization point of view.

There are a couple services that work very well, like compound finance and fulcrum (these are the biggest ones) and they've always worked well for me.

Is there any platform for this Decentralized Finance (DeFi) where you will make your investments?

Can you mention one so that I can study? I'm not interested in earning interest but I'd like to learn more.

There's a couple, I'll give you some examples

Compound Finance - this is probably the most popular one and I've recently starting looking and using it.

Nuo - provides daily interest to you by lending out your funds on a decentralizated plaftorm.

Fulcrum - regular decentralization lending platform

dYdX - a exchange with options to trade, borrow and lend.

Don’t NEXO and SALT fall in the same category?
Nexo: https://nexo.io/ (6.5% interest?)
Salt: https://saltlending.com/

And of course celsius? https://celsius.network/

Edit: yeah i was half asleep making this post. Above are obviously not decentralized, but still might be worth looking in to if you’re interested in these sorts of platforms.

I myself think they’re pretty weird. AFAIK, your funds (with most platforms at least), arent actually insured, and these interest rates seem way to high for such collateralized loans imo (but the interest rate goes down dramatically if you put more than x BTC in such platforms, (which is kind of weird because, with a rate cut from 6.5 to 0.8%, i’d either multiaccount in a legal way or simply find another lender, right?))

I think it’s kind of a lazy way of utilizing capital at this point, and i can’t (if they’re actually legit), again, see how they would keep up such rates.
Perhaps i dont fully understand their business model, or the interest for such loans.(?)

In general, it's all very short term minded. The main purpose of these features is to make people buy and hodl their coins because it can do more than just go up in value. Great for those behind the projects, not so much for you.

I can't think of any legit profitable platform that has been worth it over a longer period of time. The more legit a platform is, the lower the rewards generally are. Easy money doesn't exist, especially not without there being a catch.

Maker is probably the most popular one. It has the highest volume and TVL in the DeFi world.

I've personally used Compound and InstaDapp, got around 4-5% APR with USDC, and 7-9% APR (fluctuate daily) with DAI. If you want to try, I recommend using DAI instead of USDC or Tether because the market seems to appreciate the more decentralized nature of DAI.

I believe that those 2 platforms are actually no decentralized finance solutions and are more similar to centralized finance options, but those 2 are probably the biggest and longest running lending operations out there. Not 100 percent sure though.

They work in a weird way, especially since they might not always been insured, and the interest rates work in a weird way for sure. Just put a little money in the site, don't worry about it that much and you'll usually make a decent sum of money off it.

If you wanted to earn interest through your coins, use the reputable ones. Though it's really not decentralized, your best bet might be BlockFi(and probably Celsius). As far as I know, they they store their funds through Gemini's cold storage system, which is probably a good thing I guess? I don't think there are any reputable "decentralized" platforms to earning interest in right now, hence I really don't suggest using them for now. As always, do your due diligence.

Still better than the banks with their 0.75% p.a. and the funds' investment averaging the 3%. These platforms can be interesting for someone looking to diversify his investments. Just like some others do with Staking. If you have $1000 to spread it works the risk (which I consider low/medium).

There was a topic a few months ago about this, that's how I discovered these sites. Only Nexo and Celsius looked interesting because to me because IIRC, with Nexo at least, can leave whenever you want. The one in the OP I didn't know, but it seems better.

I agree with this, there no point to down the newish decentralised version when there are already pretty reputable platforms out there for you to lose, salt lending comes to mind here.

You could also try investing in a casino's bankroll, there aren't a lot of options out there but you do make pretty good interest and it's pretty safe especially if your dealing with a trust casino.

Defi is not new. but new projects are pushing it. You have already heard of Defi or at least used it if you used any of those DEXs that make use of WETH.
Yes sir. WETH is a Defi project and probably the most well known. There are new entrants or.. aspirants to Defi like Vsys. That one is made by Sunny king same guy that create the whole proof of stake system years ago.

Will I be able to earn interest for my crypto holding by simply sign a message with my address? If not, what is decentralization here? How do you people believe into a service start up for your funds? I am sorry I checked one site mentioned here and all the above posts but I am not getting any answers of my basic doubts.

Even registered and highly reputed exchanges/wallet providers are getting hacked these days easily and scamming in the name of doubling, pyramiding are more common and frequent in crypto space now a days. Also, national banks in my country are announcing bankruptcy due to unrecoverable loans time to time. Still, OP is getting a positive reply in less than 20 minutes and that also seemed like from own experience. I am really confused.

Yes, you'll get the interest because your funds are used by the borrowers. The decentralization part is somewhat blurry but at least you don't need a custodial (except you have to trust the code & the admin, who has the access to change the core code). You can verify the code and take a look at the smart contract if you have doubts.

Maybe you should take a look deeper. Compound, for example, uses a flexible interest rate based on the current supply/demand. It changes every minute. You need to understand that anyone who want to take a loan needs to supply collateral too which will be liquidated if they failed to pay.

You may farm XGT from as low as less than $1 in the Xdai chain and honeyswap. It has a very low gas fees of less than $0.01/tx. You may want to check it here.

https://Xion.finance

https://info.honeyswap.org/pair/0xB2B15DaE735e52CA0902824570Bd2458d78672f8

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So far no problem to me earning interest through DeFi coins or just earning interest by holding your own crypto, many exchange provide the feature hold and earn and I use that one till now as long as they dont give something instant money and bla bla bla like promise huge return in short time. As always in investment there's always risk so use your money wisely.

You choose a good platform because hacks in defis are rampant and it might include your balance, so, choose the best defi.
The risk is that the price of the coin you put at stake might go down while it's on the platform. But there are wallets where you can literally stake it and don't have to go through a defi and that's more convenient.

When you are talking DeFi as a whole, it can't be determined as safe or legit because it contains lots of scams and lots of projects that are trying their best. So your question is same as "are cryptocurrencies legit?" Some of them are.

But of course they aen't "safe", they contain risks, otherwise they wouldn't be profitable. Also ton of these DeFi yield farming things have high inflation with anon devs just waiting for a rug pull and i don't think that a single one of them can be compared to a bank.

I think the landscape when OP asks this is quite different from the current status quo. In 2019, there might be not so many pump & dump project, but as of now, there's dozen of them. However, the ecosystem also grows, with more and more audits. Truth to be told, being audited doesn't mean they won't scam or fuck up due to some bugs.

Farming is still a good activity as long as you don't enter too late, which allows early adopters or the dev itself to dump on you. Don't hope that the high APY will stay though, even if they did, there's a high chance that your token would be worthless the longer you stake it.

Earning through staking on Decentralized Finance platform has been a great tools through which people make passive income in the past few months. It works like having a fixed deposit in bank. And this staking features has helped a whole lot not in driving series of DeFi coins or token to a very high ATH as it brings about people acquiring more to be staked and reduced the quantity offered for trading.

It helps the market and economy of that token because it locks tokens on those platforms for a certain time. And when that happens, there's a lesser supply in the market which makes the price a bit higher. But I'm not still on it.
I don't find the rates are good for me and I better choose holding than sending it there.

Do it ever in this investment does offer some reasonable or tempting rates or interest of your coins to be held up for a specific period of time?
So far in my experience i havent seen one and when it comes to risk ratio then i dont see for it to be worth on putting up your money with this one.It is much more worth if you do just simply
held of your own coins with your own wallet and you might able to earn bigger than into those interest that had been offered and not just talking about on the money you can possibly
earn but also with the risk because letting those 3rd parties handling out your funds isnt really that giving out confidence on my part, nothing beats out when you do
possess the keys rather than on others wallet.

I don't find the rates tempting but they are reasonable. Just as I've said, that I'm better to hold my coins than to put it on any of the same feature of locking it on exchanges. Although there are flexible terms that you can withdraw anytime but you don't expect the interest would be that much.
I agree, we hold it on our wallets and we have the keys.

They might be legit at first but you wouldnt know when it runs until half year and do know that certain news that they had ran all of the money that they had gathered which is a casual thing that do happen on this cryptocurrency world on where  those fools who do believe on good returns will really easily believe with these basic schemes.

For some DeFi risk then this would be a good read up.

Does DeFi offer investors higher returns with no middlemen or a higher risk of fraud? (https://www.selachii.com/Blog/Does-defi-offer-investors-higher-returns-with-no-middlemen-or-a-higher-risk-of-fraud.html)

One of the common uses of DeFi.
-Lending platforms that use smart contracts to replace the usual intermediaries

It does sounds good and right but doesnt still remove the fact for possible scams to happen.Never ever consider to say that 100% safe do exist.

It is indeed, I totally agreed that's why it is still much good and safe to make trade into cryptocurrency or altcoins in the market rather than
DEFI coins. In fact, it is very seldom to me to trade defi coins, I might don't know if the coins that I hold can be one of the Defi coin but usually, I like to earn via crypto currency that's the truth.

There is always some risk when you are trusting somebody else with your money. DeFi carries more risk because there is no insurance and there is no central authority you can go to that will protect you from being scammed. We've already seen people lose a lot of money due to hacks and scams but the promise of high returns is what lures investors into taking their chances.

promise of high return is infact already a signal that something bad may happen soon but if there are still takers with that they should understand the risk that they are going to face .

lots of scams in defi are reported and its normal because like you said defi are decentralized but im not saying that there will be no scams in centralized areas but that may be lesser because they afraid that they can get reported .

If I where you guys you should never trust any third party platform to hold your bitcoins or other valuable coins since we don't know if the owner will follow what they have written on their whitepaper about the staking terms and also to many DeFi scams happen recently so its really risky thinking to gives a though about this kind of investment.

Just trade your coins since the percentage they offer to you is can possibly earned in short period of time if you know how to trade your coins in certain trusted exchange available.

The offers and functions of staking make it available to earn those types of interest. I think that's one of the reasons that it's spiking in uses as well. Mostly, it's always going to be tricky because as long as the price of them is increasing, the result is better. Still, once it changes in direction, there might be a crisis in which you cannot withdraw it immediately because it will be locked or something.

Once you invest in something like this, make sure that it's going to be something that you can afford to lose, just like in any investment.