Best DeFi Lending & Staking Rates

January 2023

Start Earning Passive Income by Staking & Lending your Crypto Assets
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Please note: Every Bit Helps DeFi rates are regularly updated, although rates can change quickly. Every Bit Helps does not provide financial advice, investing in cryptocurrency is very risky. We recommend seeking advice from a professional before making a financial decision.

What is Decentralized Finance

DeFi (Decentralized Finance) platforms are run by the power of smart contracts. The money you deposit into your DeFi bank will be given out to borrowers when the acceptable loan conditions are met. With over-collateralization in place, the collaterals of borrowers will be liquidated if the value of the collateral falls below a certain threshold.

With the DeFi market growing at an alarming rate, we want to keep you updated on the best platforms in decentralized finance. For more information on what is Defi? check out our explainer video.

Decentralized Finance vs Centralized Finance

Although centralized finance (CeFi) and decentralized finance (DeFi) platforms offer similar services to the same set of customers, there is a stark difference in how they operate.

The main difference between a DeFi and CeFi platform is who controls and runs the platform. With CeFi platforms like Celsius or BlockFi, it’s a centralized authority that runs the day-to-day operations of the financial institution. With DeFi, it is algorithms and smart contracts that run the show.

Whether it’s a lending platform or exchange, your funds are stored in a central reserve on a CeFi platform. Whereas Aave and Compound are DeFi platforms and money moves from one user wallet to another user wallet without moving through a central reserve. Due to the nature of how they are run, there are a host of differences that arise due to this major difference:

What is CeFi?

What is DeFi?

Staking vs Lending Cryptocurrency
Staking is a concept unique to the blockchain where users pledge their tokens to the network to validate transactions and earn rewards in return for your validation. With staking, you are required to lock your tokens for a defined period, which means your liquidity will be compromised. Lending, on the other hand is like a loan where you give out your money and earn interest on your principal amount.

Out of the two, staking is riskier but also has higher chance of earning more profits. If the tokens you are staking multiply in value, you will be able to make a higher profit. If they depreciate, you might end up losing on your investment.

Lending is less risky as there are mechanisms in place to protect your money like the liquidity threshold. With some lending platforms like Aave, you can even lock your interest rate (relatively lower) for the duration of your loan.

You can stake your tokens on popular cryptocurrency exchanges like Kraken, Binance, Coinbase and Huobi. Looking for a crypto exchange? Why not use compare exchanges and find one that suits your requirements.

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