Best dApps for Making Money
Thasni Mayaon June 10, 2022.
DeFi taps into blockchain technology's decentralized, democratic make-up to make financial services accessible to more people. It is now rapidly expanding to more blockchain ecosystems and services with a new resilience. Many dApps left the ground along the way, having failed to prove their relevance in the market that is increasingly becoming competent. Some projects have successfully empowered people to monetize their technical and strategic skills.
In this article, we look at the best dApps in the market and how you can make money with them.
How You Can Make Money With dApps
There are multiple ways to make money with dApps. It primarily depends on the services offered by these platforms. The most popular DeFi services are lending, borrowing, yield farming, liquidity providing, derivative trading, and prediction markets. Let’s take a look at each of these services and see how you can monetize them.
Crypto lending and borrowing
Crypto lending is a financial service where participants lend cryptocurrencies in exchange for annual interest. Lending and borrowing dApps are a great source of passive income. The transactions on lending and borrowing protocols are overseen by smart contracts without the involvement of third-party financial institutions.
There are no fixed rules or norms that tie together lending and borrowing dApps. They create money markets for different crypto assets. As a lender, you can add your idle cryptocurrencies to the liquidity pools listed on these dApps. On the other hand, borrowers take collateralized loans from the pools by paying an annual interest.
The attractive interest rate on crypto lending and borrowing dApps comes with other perks when compared to traditional platforms. For example, you need not submit paperwork here. Your credit score is not taken into account. It is a hedge against market volatility. Then again, if you’re locking your funds for a fixed term, it will prevent you from seizing market opportunities.
Yield farming allows you to make multiple layers of income from your crypto savings. There are many different types of yield farming strategies.
Some dApps like DEXs and lending protocols incentivize participants to add tokens to liquidity pools governed by smart contracts. In exchange, you are given a share of the trading fees, accompanied by LP (liquidity pool) tokens. You can then stake these LP tokens to other pools to earn more rewards. You can also make use of the arbitrage opportunities in DeFi to make money via dApps. A popular yield generation strategy is to switch between lending and borrowing pools, exploiting the interest rates.
Popular yield farming platforms are Compound, Uniswap, Synthetix, Curve, and Aave.
DeFi derivatives are crypto assets that derive value from an underlying asset, which could be cryptocurrencies, stocks, commodities, etc. While DeFi derivatives are relatively new, derivatives have been an integral part of the global economy for a long time. They are mostly used to offset losses. Currently, they are sold on dApps as a way to generate income and mitigate the risk involved in crypto trading. Crypto derivatives allow you to profit from the price movements of a diverse range of assets without actually buying or holding them.
DeFi has made its way into prediction markets too. These are basically decentralized marketplaces where you trade the outcome of events. If your prediction is correct, you earn a share of the reward pool. If it’s wrong, you lose your money. Since the settlements are self-executed on these dApps, they enjoy a significant edge over their traditional counterparts. They have great growth potential in the coming years.
Most Successful dApps
The most successful dApps are DEXs, lending and borrowing platforms, derivative platforms, and prediction markets. A few examples include Uniswap, PancakeSwap, SushiSwap, Compound, Aave, Augur, and Synthetix.
How to Find the Best dApps for Making Money
Social media platforms like Twitter and Reddit are the best places to find dApps. Look up relevant hashtags like #DeFi, #crypto, and #dApps to find the trending projects. If the community is active, add the project to your watchlist. Go through the project’s official website and pitch deck to get a brief understanding of its relevance.
If it interests you, read the white paper and learn about the project in detail. It will give you information about the products and their unique value propositions, tokenomics, vision, mission, revenue streams, and team. You can also search for reviews published about the project online. Don’t forget to ensure the technical competence of the dApp before using it. While all dApps are prone to vulnerabilities, responsible projects will have their smart contracts audited by a reputed company.
Best dApps to Make Money With
We recommend investing in projects with ambitious visions, realistic roadmaps, and competent teams. They have a better chance of providing consistent returns in the long run.