When it comes to making profit with DeFi or accumulating value through staking, investors prefer the first option. Those who opt for staking do not get appreciation. This attitude is not unexpected because DeFi has always been considered a high-yielding option. In 2020 itself, top 3 DeFi protocols – Uniswap, Compound and Aave reported revenue of over $1 billion. Their monthly revenue reports have been impressive as well. Major protocols generated more than $200 million in September this year. In May, the performance was similarly impressive at more than $400 million.
DeFi v. Staking
There are many reasons why cryptocurrency investors infuse more liquidity into DeFi applications and less in staking. Both options allow passive incomes and investors can lock their crypto coins for some time in lieu of tokenized rewards. The yield farming of DeFi provides higher returns because the funds are distributed across several incentivized pools. The preference seems natural given investor’s motivation to get higher returns from their crypto investments. At the same time, staking still offers some benefits in developing better cryptocurrency investment strategies.
Strategic Investment Requirement
Conventional staking has always been a backup solution for traditional investors who do not have time or determination to get involved in crypto yield farming. This farming method requires hands-on approach where investors have to compare the incentives of liquidity pools. They must conduct their own due diligence. There is also a higher risk that invested money can be lost to contract bugs or impermanent losses.
Staking has been a conservative option for investors looking to counterbalance their crypto investments and avoid the uncertainty associated with the DeFi market