Exponential’s guide to DeFi breaks down everything you need to know to start earning yield on your crypto so you can make money all the time — not just when Bitcoin is up.

DeFi revolutionizes finance by eliminating middlemen through blockchain technology, using smart contracts for secure transactions, protocols for financial services, and liquidity pools for lending and trading, enabling users to earn yield on their crypto investments.

DeFi yield is profit earned from participating in protocols, similar to interest in savings accounts. Key asset classes include Bitcoin, Ethereum, stablecoins, and altcoins, while main yield-generating protocols are lending, market making, staking, and bridging. Understanding the source of yield is essential for evaluating opportunities.

DeFi lending protocols enable users to lend and borrow crypto without banks, allowing for potentially higher returns directly from borrower fees. For example, investing in a DeFi lending pool can yield greater interest compared to traditional savings accounts.

DeFi market making eliminates intermediaries by using liquidity pools, allowing anyone to become a market maker and earn fees from trades, similar to traditional brokerage operations. Users can deposit assets and receive a share of transaction fees based on their contribution to the pool.

Staking in DeFi involves locking up crypto assets to become a validator, earning transaction fees while ensuring network integrity. This system discourages fraud by risking the staked assets, similar to how notaries operate in traditional finance.

DeFi bridging allows users to transfer assets between different blockchains, similar to bank transfers in traditional finance. Bridges facilitate these transfers using liquidity providers who earn rewards, making it easier for users to access various DeFi applications across networks.

DeFi investing involves evaluating risk and reward, with a trend towards diversification. Exponential simplifies this by curating top DeFi pools, offering one-click investing, expert assessments, and multi-chain support, while eliminating gas fees and tax complexities.

Understanding DeFi yield – lending, market making, and staking

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