May 27, 2022

    DID YOU KNOW? Generally, crypto investors can potentially generate twice – if not more than 10 times – the value of their initial investments if they use DeFi services or apps.

    Does it surprise you? It shouldn’t.  

    Welcome to the world of Decentralized Finance (DeFi)!

    In this article, we unravel the mystery behind DeFi’s hard-to-believe but justifiable high yields. So, let’s dive in!

    KEY TAKEAWAYS:

    • DeFi: The Great Disruptor
    • So, Why Are DeFi Yields High?

    DEFI: THE GREAT DISRUPTOR

    Truly, it’s not surprising that people who have just wandered into DeFi would think that DeFi platforms are ponzi schemes or some kind of a scam. For what reason? Mainly, because each is offering a promise of high yields and returns.

    To be fair, this assumption is sometimes correct –– which is why we always advise crypto investors to do their own research, and why providing security and transparency to our users are paramount for us at Cake DeFi as well.

    That said, our take is that this surprise or apprehension really stems from the fact that most people are used to the earnings and interests that Traditional Finance (TradFi) offers. For example, banks nowadays would pay you an interest rate of just around 0.3% to 0.5% for lending them your funds by opening a savings account with them.

    So, wouldn’t it be a complete shock for anyone to find out that DeFi platforms offer more than 10 times of those rates? Of course, it would be. But, it is exactly why DeFi is not only touted as a disruptor of TradFi but also one of the key innovations to have come out of the digital space.

    SO, WHY ARE DEFI YIELDS HIGH?

    Still, the question remains: Why are DeFi yields so high? A simple answer is that yields are often high at the very beginning of every project. Why? Because, normally, the number of platform users are few. In time, as more and more people use the platform, the yields tend to decrease.

    That said, there are other quantifiable factors that drive high yields, which includes:

    • Blockchain emission rates
    • Amount of people participating in the platform (particularly in Staking and Liquidity Mining)
    • Specific rewards allocation of Liquidity Mining pools
    • Performance of blockchain’s native token

    It should be noted, however, that these factors vary from platform to platform.

    In summary, these yields or rewards are hard coded in order to maintain a deflationary ecosystem. Why? The goal is to attract more users or participants to enable the platform to thrive, be more decentralized and stable, and – ultimately – to survive.

    Our role as an aggregator of DeFi apps and services is to seek, assess and provide access to investment opportunities that would ultimately benefit our users - not just in terms of high yields but also security and transparency. If you want to take advantage of these benefits but are not yet a registered Cake DeFi user, you may click here to sign up and start generating passive income with us.

    You will get US$30 worth of DFI when you register successfully and make a deposit of US$50 or more, and allocate the amount for at least 28 days into either our Lending , Staking Freeze r or Liquidity Mining Freezer service.

    To know more about the many benefits and advantages of using Cake DeFi, you may check out our blog section or FAQ section .

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    Why are DeFi rates so high?
    DeFi users can earn high yields due to the high demand for leverage, as well as through native tokens and protocol fees. As the DeFi ecosystem matures and adoption grows, many users are becoming aware of the abundance of opportunities to earn on their crypto assets. more
    Is high interest rate good?
    Because higher interest rates mean higher borrowing costs, people will eventually start spending less. The demand for goods and services will then drop, which will cause inflation to fall. more
    When applying for credit is it preferable to receive a low interest rate or a high interest rate?
    Low interest rates are better than high interest rates when borrowing money, whether with a credit card or a loan. A low interest rate or APR (annual percentage rate) means you're paying less for the privilege of borrowing over time. High interest rates are only good when you're the lender. more
    Which stage of demographic transition shows a high birth rate and high death rate?
    Pre-Industrial Stage During this stage, the population is stable, with both high birth rates and high death rates. The death rates are high because there is increased disease, minimal medical care, poor sanitation, and limited food supplies. more
    Which stage of demographic transition sees slow population growth because of a high birth and and a high death rate?
    Stage 1 Stage 1—High birth and death rates lead to slow population growth. Stage 2—The death rate falls but the birth rate remains high, leading to faster population growth. Stage 3—The birth rate starts to fall, so population growth starts to slow. more
    How are DeFi rates so high?
    DeFi users can earn high yields due to the high demand for leverage, as well as through native tokens and protocol fees. As the DeFi ecosystem matures and adoption grows, many users are becoming aware of the abundance of opportunities to earn on their crypto assets. more
    What is high rate method?
    "Do I pay the highest interest first?" And those are all possible ways of doing it but the mathematically optimal way of doing it is to pay down the highest cost debt first. So, that method is often called the high rate method. Where you want to pay down your highest, your most costly debt first. more
    Why do birth rate and death rate fluctuate at a high level in the stage 1 of the demographic transition model?
    Stage 1 - High Fluctuating Birth Rate is high as a result of: Lack of family planning. High Infant Mortality Rate: putting babies in the 'bank' Need for workers in agriculture. more
    Which stage of demographic transition shows a high birth rate and high death rate Weegy?
    Stage 1: Pre-transition. Characterised by high birth rates, and high fluctuating death rates. Population growth was kept low by Malthusian "preventative" (late age at marriage) and "positive" (famine, war, pestilence) checks. more
    Is Chinas inflation rate high?
    But China's inflation rate has been relatively low, due to its limited stimulus during the pandemic and the weighting of goods and services in its CPI basket. more
    Is 127 heart rate high?
    Generally, for adults, a heart rate of more than 100 beats per minute (tachycardia) is considered high. Heart rate or pulse rate is the number of times your heart beats in a minute. more

    Source: blog.cakedefi.com

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