How to make passive income using decentralized lending platforms

centralized lending platform

Quite recently, we shared information on “How to monetize crypto using centralized lending platforms”. This time, we would like to illustrate how the process works in the DeFi world. We will also consider whether it is worth using DeFi.

What are decentralized lending platforms?

Decentralized lending platforms are nothing but a rejection of the idea of exercising control over the financial system, which in traditional finance is done by third parties. Instead, we get the ability to operate in a system based on blockchain technology, using smart contracts. The initiator of the movement is none other than the creator of Bitcoin – Satoshi Nakamoto. It was him who, by creating the first cryptocurrency, eliminated transaction middlemen and allowed anyone who was willing to do so to join the new generation of finance.

After a few years, Satoshi Nakamoto’s idea evolved and developers separated an independent crypto sector called DeFi. This is where crypto-based borrowing is possible, as well as lending funds to other marketplace users and making extra profits from it.

Decentralized platform monitors

To make a choice of the platform on which you would like to make money, it is worth visiting one of the DeFi monitors. The most popular of them is DeFi Pulse. There you will find a lot of information about the whole ecosystem, starting from the amount of funds invested in the sector to the data on individual projects. Each individual lending platform is thoroughly screened here. This allows for information about the possible profits to be made on each one.

Lending by example of Compound Finance

Among the platforms listed in the DeFi Pulse monitor, we can see that Compound protocol is very popular and trusted. At the time of writing this article, it is the largest platform with the highest rating. It provides the possibility to lend money and earn interest from it. Since Compound is part of the Ethereum ecosystem, this interest can be accrued with each subsequent Ether block mined. Using decentralized platforms, there is no need to go through the KYC process, so Compound relieves us of the problem of often quite burdensome verification. Using the platform is very simple. All we need to do is connect our wallet to it and upload the cryptocurrency we would like to use. The interest rates for different coins are quite diverse, so we will not cite them. In exchange for sharing cryptocurrencies with other users, we will earn in the Compound Protocol currency, which is COMP.

Opportunities and risks

The opportunities offered by earning from decentralized finance are quite similar to those found in centralized finance. However, it is worth considering this kind of solution, especially if we want to store our cryptocurrencies long-term. In addition, earning passive income on both types of platforms at the same time, is a diversification of our portfolio and its possible risks. It is important to remember that DeFi sector is still young. Although it allows you to make very lucrative profits, it also has its share of hacking problems. Hence, we again urge you to do proper research before using it.

DisclaimerBlockbulletin does not take accountability of investments based on the information of the website. We highly advice readers to make extensive research prior to any invest

Share this post

More Guides

It seems we can't find what you're looking for.

Latest News


XRP outperforms Bitcoin and Ethereum

In the past week, XRP decisively outperformed its main rivals, Bitcoin (BTC) and Ethereum (ETH), in terms of capital flows. Moreover, it recorded an impressive $2.7 million…

Solana and Avalanche on the eye of investment funds

Two alternative coins, Solana (SOL) and Avalanche (AVAX), are gaining increasing interest and are successively attracting the attention of investment funds. Although bitcoin (BTC) remains the main…
All articles loaded
No more articles to load


All articles loaded
No more articles to load

Knowledge Base

How to open and use Exodus wallet

The market offers many tools for storing crypto assets. In the article under the title “Cryptocurrency wallets” we explained several tools worthy of attention. One…

Cryptocurrency wallets

We talked about security when trading crypto assets in an article titled “Online security“. We also mentioned how important it is to have an external…

Cryptocurrency hardware wallets

From the article titled “Cryptocurrency wallets” you learned about the different types of wallets. They were briefly characterized there. Let’s now take a closer look…

Which cryptocurrency Brokers to use

In the article “Where to Buy Cryptocurrencies (Exchanges)“, we introduced you to which exchange platforms you can purchase cryptocurrencies on. But you probably know that…

Which cryptocurrency Exchanges to use

In our article titled “Cryptocurrency Trading”, we explained that you can buy or trade cryptocurrencies from both exchanges and brokers. This time we will look…

What is a decentralized exchange DEX?

A Decentralized Exchange, or DEX for short, is nothing more than an exchange without a central regulatory body. So how does a decentralized exchange differ…

Trading cryptocurrency

In the cryptocurrency market, you face many opportunities to invest in cryptocurrency or buy or sell cryptocurrency. If you want to buy cryptocurrency to invest…

Cryptocurrency taxes in Europe

Cryptocurrencies are gaining popularity all the time and are slowly becoming a widely accepted means of payment. As more and more people are interested in…

Online security for cryptocurrency

When trading on cryptocurrency exchanges, we want to feel that our funds are fully protected. You’ve probably heard more than once about the losses traders…

Leveraged trading

The cryptocurrency market moves quite fast and offers the public the opportunity to make a lot of money in a short period of time. Nevertheless,…
All articles loaded
No more articles to load