#How I Made $10,000 in a Month with DeFi (And How You Can Too)

Hey everyone, I'm so excited to share with you my journey of making money through cryptocurrency. I'm a student who has always been interested in the world of blockchain and decentralized finance (DeFi). I've been learning and experimenting with different platforms and protocols that allow anyone to earn passive income by lending, borrowing, staking, or swapping crypto assets.

In this blog post, I'll tell you how I started with DeFi, what challenges I faced, what strategies I used, and what tips and tricks I can offer to help you succeed in this space. So let's get started! 🤩🥳🥳

How I got into DeFi 😉

I first heard about DeFi when I was browsing Reddit and saw a post about Compound, a protocol that lets you earn interest on your crypto by lending it to other users. I was intrigued by the idea of earning money without doing anything, so I decided to give it a try. I had some Ethereum (ETH) in my wallet, so I connected it to the Compound and deposited some ETH into the protocol. I was amazed to see that I was earning interest every second and that I could withdraw my funds anytime.

I wanted to learn more about DeFi, so I started reading articles and watching videos about different protocols and platforms. I discovered that there were many ways to earn money with DeFi, such as borrowing crypto at low-interest rates, staking crypto to secure a network and get rewards, or swapping crypto for other tokens using decentralized exchanges (DEXs). I was fascinated by the possibilities and the potential of DeFi.

What challenges have I faced??? 😐

Of course, DeFi is not all sunshine and rainbows. There are also many challenges and risks involved in this space. Some of the challenges I faced were:

• High gas fees: Gas fees are the costs of executing transactions on the Ethereum network. They depend on the network congestion and the complexity of the transaction. Sometimes, gas fees can be very high, making some DeFi transactions unprofitable or even impossible. For example, there were times when I wanted to swap some tokens on Uniswap, a popular DEX, but the gas fees were higher than the amount of tokens I wanted to swap. This was very frustrating and discouraging.

• Smart contract risks: Smart contracts are the code that powers DeFi protocols and platforms. They are supposed to be immutable and trustless, meaning that they execute as intended and cannot be tampered with. However, smart contracts are not perfect. They can have bugs or vulnerabilities that can be exploited by hackers or malicious actors. For example, there have been several cases of DeFi hacks where millions of dollars worth of crypto was stolen or locked due to smart contract flaws. This was very scary and alarming.

• Impermanent loss: Impermanent loss is a phenomenon that occurs when you provide liquidity to a DEX pool. A DEX pool is a collection of two tokens that are used for swapping. For example, a DEX pool might have ETH and DAI (a stablecoin pegged to the US dollar). When you provide liquidity to a pool, you deposit both tokens in a specific ratio. In return, you get liquidity provider (LP) tokens that represent your share of the pool. You can use these LP tokens to claim your portion of the trading fees generated by the pool.

However, when the price of one token changes relative to the other token in the pool, your share of the pool also changes. This means that you might end up with less tokens than you started with when you withdraw your liquidity. This is called impermanent loss because it is only realized when you withdraw your liquidity. If you keep your liquidity in the pool, the loss might be recovered if the prices revert back to their original ratio.

Impermanent loss can be very confusing and frustrating for new users. It can also result in significant losses if the price changes are large and persistent.

What strategies I used 🤫

Despite these challenges and risks, I was able to make money with DeFi by using some strategies and best practices. Some of them are:

• Diversify your portfolio: Don't put all your eggs in one basket. Invest in different protocols and platforms that offer different services and returns. This way, you can reduce your exposure to any single risk or failure. For example, I invested in Compound for lending and borrowing, Aave for flash loans (loans that are repaid within one transaction), Synthetix for synthetic assets (assets that track the price of other assets), Curve for stablecoin swapping, Balancer for automated market making (AMM), Yearn for yield farming (maximizing returns by moving funds across different protocols), etc.

• Do your research: Don't blindly follow the hype or the crowd. Do your own research before investing in any DeFi protocol or platform. Read the whitepaper, check the code, audit the smart contracts, understand the risks and rewards, compare the fees and rates, etc. You can also use tools like DeFi Pulse, Zapper, or DeBank to track and analyze your DeFi portfolio and performance.

• Manage your risk: Don't invest more than you can afford to lose. DeFi is still a nascent and experimental space. There are many unknowns and uncertainties. Things can go wrong at any time. Be prepared for the worst-case scenario and have a plan to exit or recover your funds if needed. You can also use tools like Nexus Mutual or Cover Protocol to buy insurance for your DeFi assets and protect yourself from smart contract risks.

• Learn from others: Don't be afraid to ask for help or advice from other DeFi users. There are many communities and forums where you can learn from the experiences and insights of others. You can also follow some influencers or experts on Twitter, YouTube, Medium, etc. who share valuable information and tips about DeFi. Some of them are: Anthony Sassano, Andre Cronje, Stani Kulechov, Kain Warwick, Julien Bouteloup, etc.

What tips and tricks I can offer 🤓

Finally, I want to share with you some tips and tricks that I learned along the way that can help you succeed in DeFi. Some of them are:

• Use MetaMask: MetaMask is a browser extension that allows you to interact with DeFi protocols and platforms. It is the most popular and widely used wallet for DeFi. It is easy to use and has many features that make your DeFi experience smoother and safer. For example, you can adjust your gas fees, switch between different networks, add custom tokens, etc.

• Use Layer 2 solutions: Layer 2 solutions are technologies that aim to improve the scalability and efficiency of the Ethereum network by moving some transactions off-chain. This means that you can execute transactions faster and cheaper without compromising security or decentralization. Some of the Layer 2 solutions that are compatible with DeFi are: Polygon (formerly Matic), xDai, Optimism, Arbitrum, ZkSync, Loopring, etc.

• Use aggregators: Aggregators are platforms that aggregate different DeFi protocols and platforms and offer you the best deals and opportunities. For example, you can use 1inch to find the best prices and routes for swapping tokens across different DEXs. You can use Yearn to find the best strategies for yield farming across different protocols. You can use InstaDApp to manage your DeFi portfolio across different platforms with one dashboard.

• Use bots: Bots are programs that automate certain tasks or actions for you in DeFi. For example, you can use Rebalance to automatically rebalance your portfolio according to your preferences and risk profile. You can use KeeperDAO to execute profitable arbitrage opportunities across different protocols. You can use Gelato to schedule transactions for future execution.

Conclusion

DeFi is an amazing and exciting space that offers many opportunities and benefits for anyone who wants to make money with cryptocurrency. However, it is also a complex and risky space that requires a lot of learning and experimentation. I hope that this blog post has given you some insights and tips on how to succeed in DeFi.

If you have any questions or feedback, feel free to leave a comment below.

Thanks for reading and happy DeFi-ing!🥳🥳🥳