I need some help with DeFi and Liquid Staking

I’ve held BTC, ETH, and DOT for just over a year, but I’m seeing more and more people making money with crypto in different ways, and I want to.

Can someone explain to me or point me in the right direction to find out how to make passive income with crypto and DeFi? Positives/negatives, risks, etc.
I see people talking about Liquid Staking on Ethereum and Polkadot chains, but I don’t fully understand it.

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Google:
- liquidity mining
- staking rewards
- liquidity pools
- impermanent loss
- airdrops
- proof of stake
- minting
- stable coins
- crypto lending protocol
- vaults

The space gets more and more complicated. I know it’s not what you want to hear but do research. Read a lot. Understand the mechanics.

Some protocols to look into (as education not that they are good or bad):
- polkadot
- cosmos atom
- terra Luna
- anchor protocol
- StaFi (Liquid staking)
- aave
- Lido
- thorchain
- and many many more that all play in defi space

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what this user said + getting a sui stack for d0b0

>Liquid Staking

In these platforms when you stake your assets, you will mint another token too, which you can trade or stake again.
Lido
StaFi
Ankr
Rocketpool
These pools are the most popular ones but the interest rate is varied.

I got into crypto last November and learned about 90% of the things listed in the first comment. I’m someone who *needs* to see the bigger picture of something I’m going to learn, but this time I didn’t and I am very glad.

I started with simple staking. It blew my mind I could earn more crypto with crypto.

Then I learned about liquidity provision and aped into it because the APY was usually much better, compared to staking.

Then I learned about Impermanent Loss, although it didn’t affect me as much because the capital I was playing with was fairly small. I also learned very recently why the hell it’s ‘impermanent’.

Then I learned about liquidity pool token farming

Then I learned about airdrops and what the purpose of airdrops was

Then I learned how to minimise impermanent loss (by removing my LP tokens when the prices of the two assets in the liquidity pool are roughly the same as when I put my LP tokens in)

Most recently I’ve been playing with stable coins, although it’s funny to me because this tends to be the first step for a lot of people, yet I’m getting into it after a while.

Point is, all this happened over 5 months. I didn’t force any of it. I never thought ‘ok now I need to learn about this, this and this’. It came naturally when I started following people on Twitter.

My bags are in 3 blockchains which I will not name because it’s easy to be accused of being a shill, and I can say I learned different things from all of them. But the very first blockchain I invested into made it extremely easy for me to understand what was going on, because the blockchain is early in its development.

i want to get into lending stablecoins since they yield a nice APY...but i just end up buying BTC.

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What is the DOT rate in these platform?

Currently 11.60% APY of StaFi.
StaFi is the main liquid staking platform on Polkadot Ecosystem that is cross-chain. It's support DOT, ETH, and BNB chains

I would recommend starting out with something simple and that is liquidity mining ONLY using the tokens that you currently hold which, in this case is ETH and BTC. If you are not familiar with the concept of liquidity mining, it basically involves you pairing two tokens together in a 50 : 50 ratio (e.g. USD500 of $ETH and USD500 of $BTC) in a 'pool'. You will be given an LP (liquidity provider) token which you can then 'stake' in a farm to earn you the platform (or farm) rewards. Staking your $ETH-$BTC LP token in a farm basically means that you are depositing your LP tokens in the platform and to reward you for doing so, the platform will give your their native token.

What are the risk(s)/downside(s)?

1. Smart contract risks: Essentially, the platform getting hacked. So, one way to minimise this risk is by going through the project/protocol's documentation and see if their smart contracts are audited. That said, this does not guarantee that it cannot be hacked. Also, look out to see if the project/protocol also offer bug bounty with Immunefi which is the leading bug bounty platform in crypto.

2. Rug pulled by the project's team. For this, you may want to see if they have done any podcast on Youtube or Twitterspaces to have a first-hand experience of how credible the team is.

Also, look out for any association the protocol has with any reputable project/protocol or even VCs.

3. Deposit fee: Certain platform will charge a deposit fee for providing liquidity on their platform to 'force' users to stay for at least a number of days before leaving. Some users hate this feature while others are neutral.

4. Impermanent loss: This basically refers to the dollar value that you would have lost when you provide liquidity to a platform compared to if you were to just hold them. To 'compensate' users for this, platforms offer rewards as alluded to earlier.

I think you stand a better chance with stablecoin staking. The only direction you should follow leads straight to Spool.