Overview of ways to profit from the decentralized finance (DeFi) market
The returns when using DeFi protocols will be higher than those centralized marketplaces like Binance, OKX, or ByBit offer.
1. Yield farming
Yield Farming includes liquidity mining and token farming.
Liquidity mining was one of the first and most popular ways to generate revenue in the DeFi market. This option was made possible by the emergence of DeFi protocols such as decentralized exchange Uniswap and DEX aggregator 1inch.
Farming and liquidity mining allow you to receive tokens as a reward depending on the amount of assets added to the pool (LP). Such offers often appear as part of promotions of the platforms or their partners.
Popular decentralized exchanges for yield farming:
- Uniswap (multichain);
- Curve (multichain);
- PancakeSwap (multichain);
- Raydium (Solana);
- SunSwap (Tron);
- Kodiak (Berachain).
Examples
The most reliable option is to farm rewards in liquidity pools with stablecoins. Curve is one of the most suitable platforms for farming stablecoins. For example, the annualized return rate (APR) of liquidity mining in the USDC/USDT pair ranges from 3.5% to 9.5%.
Higher returns can be obtained in liquidity pools with volatile assets. For example, the APR of the WBTC/USDC pair on the Uniswap exchange at the time of writing was ~117% per annum.
On the new DEX exchange Kodiak, which is based on the Berachain network launched in early 2025, there is a BERA-WBTC pair with a maximum yield of about 73% APR. You can often find liquidity pools with high APRs on the new protocols, but the risks will be even higher.
Pros:
- Opportunity to increase the return on investment;
- Sometimes high yields (up to 100% per annum and higher) are found;
- Passivity;
- It is possible to get an airdrop (free distribution) of tokens when new protocols are added to liquidity pools.
Minuses:
- Risks of intermittent losses due to cryptocurrency exchange rate volatility;
- High gas costs for transactions such as adding, removing assets from liquidity pools, branding (collecting) rewards, and others. This is especially true for users of the Ethereum network;
- Risks of DeFi protocol hacking or errors in the smart contract code;
- Risks of digital asset exchange rate collapse or depegging if farming occurs in pools with stablecoins;
- Require experience with DeFi protocols, having strategies, and understanding the mechanics of liquidity pools;
- It is not uncommon for conventional investments to generate more income than farming and liquidity mining.
2. Lending
Lending is analogous to lending, but it uses digital assets. Users can add their assets to liquidity pools of decentralized lending or lending protocols and earn rewards for doing so.
The mechanics of lending are similar to bank deposits, but control over the assets remains entirely in the hands of users. Unlike traditional deposits, users do not need to lock assets for a specific period so that funds can be withdrawn to their wallet anytime.
Popular lending platforms:
Examples
For example, on the Aave platform, you can deposit the Tether (USDT) stablecoin at 1.92% and the Ethereum (ETH) cryptocurrency at 2.08% APR into a loan pool. While the return may seem relatively small, it will increase proportionately if ETH, for example, rises. In addition, Aave is the largest and one of the most trusted lending platforms in the DeFi market.
On JustLend's Tron network-based platform, you can deposit USDD stablecoin at 8% APR, but the risks are higher compared to USDT, which has much higher liquidity.
Pros:
- Complete passivity;
- Possibility of stable income for stablecoins;
- Relatively low risks, except for the volatility of the crypto-assets themselves;
- Possibility of hedging positions;
- No risks of non-permanent losses;
- Ability to use additional assets without having to buy them;
- A variety of strategy options.
Minuses:
- Risk of liquidation of positions at a sharp change in the price of crypto-assets;
- Relatively low profitability (however, it can be increased by cycling at negative rates, but this will increase the risk of liquidation of collateral assets);
- The interest rate is dynamic and directly depends on the demand for cryptocurrencies.
3. Liquidity stacking
After The Merge and Ethereum's major upgrade to a Proof-of-Stake (PoS) consensus mechanism at the end of 2022, its blockchain began to support staking. However, staking requires running a validator node and blocking 32 ETH, which is about $52,000 at the time of writing. Not every investor can afford to block such an amount for an extended period.
So-called liquid staking protocols were developed to solve this problem. Such protocols work as follows: users deposit original ETH coins into a special smart contract and, in return, receive an equivalent amount of LP-tokens linked to the Ethereum exchange rate, such as stETH on the Lido platform.
In this way, users receive income from ETH staking while using the received LP tokens at will on the DeFi market, such as yield farming and lending. Due to these mechanics, liquid-stacking protocols have become very popular, with the most significant amount of blockchain assets (TVL) exceeding $15 billion as of April 2025.
Popular liquid-stacking protocols are:
Examples
The Lido protocol offers liquid ETH staking with a 3.6% annualized yield on various networks, such as Ethereum and Moonbeam, while Jito offers SOL with an ~8% yield.
Pros:
- Passivity;
- Additional investment income if the exchange rate rises;
- No lockup period, unlike classic staking;
- Low entry threshold;
- Possibility to use LST tokens for additional income or risk hedging.
Minuses:
- Risks of smart contract hacking and withdrawal of funds;
- Losses from crypto-asset price decline;
- There is no possibility of stacking stablecoins; however, LST-tokens themselves can be converted into stable coins on the market.
4. Reystacking
This method appeared quite recently — in 2024 — but quickly gained popularity. It is also known as liquid staking due to the possibility of additional use of the equivalent of already staked tokens.
The mechanics of re-staking are similar to liquid staking, except that in a smart contract, it is not the coins themselves, such as ETH, but LST tokens like stETH that need to be locked. This allows for additional revenue when using liquid staking.
Popular restacking protocols:
- EigenLayer (Ethereum);
- Babylon (Bitcoin);
- Symbiotic (Ethereum);
- Kernel (BNB Smart Chain).
Examples
With EigenLayer's market-leading DeFi protocol, LST tokens stETH can be staked at ~4% APR. The Babylon protocol based on the Bitcoin network allows you to earn approximately 1% to 3.5% annualized returns from BTC restaking.
Pros:
- Receiving additional income from tokens that have already been tokenized:
- Ability to use tokens for a variety of purposes, including risk hedging;
- No lockup period;
- Simplicity and passivity.
Minuses:
- Risks of losing part of the rewards due to slashing (penalty for unscrupulous validators);
- Risks may arise due to errors in the operation of the protocols themselves.
Conclusion
Yields in DeFi can range from a few percent to hundreds of percent annually, depending on the method you choose. You can also combine different methods, such as liquid stake and yield farming, to increase your income, but it's important to consider the risks and develop the right strategy to avoid increasing your losses.
