Man, talking about passive income is so exciting; I guess that is why I do it every day. Today, we are back to talking about passive income in decentralized finance or DeFi. The world of DeFi exists deep inside the realm of cryptocurrencies. Please read previous posts in the Passive Income in DeFi series (101, 102) to get caught up.
Now, for the main event—Staking. Staking is the process of “locking” up your cryptocurrencies on a smart contract for certain rewards and interest rates. Staking is akin to purchasing a certificate of deposit (CD) from a traditional bank.
When you buy a CD, you lock up your money for a certain period, and the bank presents you with a fixed interest rate for that period. Staking in cryptocurrencies is very similar; however, you can earn more rewards in addition to the interest rate or APY (Annual Percentage Yield).
Happy Cash Flow Retirement 2
Remember, I am talking about staking in decentralized finance, not centralized finance. In the centralized world, exchanges like Voyager and Coinbase will pay you a yield for holding specific crypto for over a month.
This process is similar to staking, but it is more of an incentive to keep your coins locked in their ecosystem. Voyager has its native utility token called VGX 2.0, which brings some extra benefits and yields 7%.
After staking enough VGX 2.0 coins, you will begin to earn the 7% yield. However, if you stake more, you will begin earning more yield on other coins as well. Holding VGX also makes you eligible for other incentives such as lower fees when cashing your coins.
These rewards are all in the realm of the centralized crypto space. When you jump in the DeFi world, things get juicier, if not a little riskier. I say risky because you can stake with new coins, and earn huge interest rates.
Art Edition: The Biggest Book on Passive Income Ever!
Once you get a decentralized wallet and link it to a DeFi exchange such as Binance, you will have many more ways to stake coins. The rewards for staking in DeFi can be more appealing than in centralized finance and traditional banking.
The world doesn’t pay you huge interest yields for super safe products though. You will have to research what you are getting yourself into before staking. I found a great article with some examples of staking in DeFi here.
When staking in Defi, coins may present stakeholders opportunities to share the growth of the coins. For example, stakeholders may share some of the revenue from fees inside liquidity pools.
So the potential rewards, on top of interest, can be high. The world of DeFi staking is fluid, and you have to stay alert to new possibilities sprouting up at any moment. I have a friend in Japan who was paying 45% APY. The event lasted for four days, and he made a good bit of money in that timeframe.
Passive Income for Christmas
He found this opportunity by being involved with coins, crypto groups, and chat rooms. So going deep into the realm of DeFi is necessary to get the best rates. While you are down there, you can also find young coins before they become famous.
There is a lot to learn with DeFi, so don’t feel too overwhelmed. I read the book “How to DeFi -Beginner” to help me sort through the rubble. I recommend that book if you are genuinely interested in getting into the world of DeFi.
Staking is a great way to earn nice interest and also participate in the growth of new coins. Another good thing is that many of these coins are not on centralized exchanges yet. So if you stake a coin early, build up a good amount of coins, and the coin goes onto Voyager, you may see your assets exponentially grow in value.
That is part of the risk/reward portion of DeFi and something you need to understand. Right now, I am a Voyager Loyalty rewards (affiliate) member because I have 895 VGX 2.0 coins (at $3.58 each today). I plan to hold them, grow them with 7% interest, and wait as Voyager takes over the world. Lol.
Anyways, find a coin you are passionate about, perform your due diligence, and have some fun. The world of DeFi may be the most exciting part of any investing scene today, so jump in—just be safe.
- Build Passive Income: 21 Passive Income Ideas (book)
- Free PDF Downloads: Download FREE PDF books here
- Financial Mindset: Become CEO of Yourself (book)
- Retirement Planning: Retirement Planning at Any Age (book)
- Investing: How We Plan to Retire on Dividends (book)
- Cryptocurrencies: My First Book on Cryptocurrencies (book)
- Real Estate: Financial Independence through Real Estate (book)
- Business: Retire Rich, Retire Comfortable with a Business (book)
- Everything!: The Biggest Book on Passive Income Ever! (book)(Web Edition)(Art Edition)
- I bought a Kindle Oasis: Check it out Amazon
- Read My Books for Free: Free Kindle Books Schedule
- Sign up to Access our “Hidden” Free Kindle Book Schedule
- My first Children’s book: A Child’s First Book on Passive Income (book)
- Book Reviews: 54 Takeaways from 54 Books (book)
- Want to Build Passive Income from Books and Affiliate Marketing? (Learn here)
- Writing: Can Grammarly Make You a Better Writer? (direct)
- My Favorite Chromebook: The Ultimate Chromebook (direct)
- Follow us: On our Facebook Page and Join our Facebook Group
- Amazon Author Page: Check out my author page on Amazon
Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Leave a Reply