4 Ways DeFi Can Generate Passive Income Staking Staking is the method by which you lock or stake tokens into a smart contract and gain more of the same token in rescue. The token in question is usually the native asset of the blockchain, such as ETH in the case of Ethereum.
Become a liquidity provider Decentralized exchanges such as Uniswap & SushiSwap support swaps between token pairs, like ETH and USDT. This liquidity comes from pooled tokens belong to liquidity providers.
Yield farming When you LP in a DEX like Uniswap, you will acquire tokens contributing your pool share. These tokens can then be locked into yield farms, which are effectively DeFi protocols that reward you with more of the same token or with a different token.
Lending Lending platforms pay users an APY for locking their assets into a smart contract. These tokens are then utilized by borrowers, who pay interest, a portion of which is returned to the lender.
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