Sign upThe ABCs of DeFi yield
2025-07-04
If you think staking is the only way to earn in DeFi, think again.
Staking might be the gateway to passive income in crypto, but it’s just the beginning. Decentralized Finance (DeFi) offers a full toolkit for putting your crypto to work—earning rewards, boosting yield, and staying liquid while doing it.
Whether you're holding stablecoins or altcoins, there’s more to earn than locking your tokens and waiting. Here's how to start exploring DeFi yield strategies that go beyond basic staking, all explained in real-world, no-jargon terms.
Staking 101
Staking means locking up your tokens in a proof-of-stake (PoS) blockchain to help validate transactions and secure the network. In return, you earn staking rewards—usually paid out in the same token.
It’s simple, low-risk, and great for beginners. But the trade-off is time. Your funds are often locked for days or weeks, and the yield may be lower than other DeFi strategies.
A = AMMs and liquidity pools
One of the most popular ways to earn yield in DeFi is by becoming a liquidity provider on a decentralized exchange (DEX) like Uniswap, PancakeSwap, or Curve.
Here’s how it works:
-
You deposit a pair of tokens (like ETH and USDC) into a liquidity pool.
-
Traders use that pool to swap tokens, and every time they do, you earn a cut of the transaction fees.
-
You stay liquid and can withdraw your share at any time (with some risks).
This system is powered by Automated Market Makers (AMMs)—smart contracts that keep prices balanced between tokens without needing an order book.
Pros:
-
Earn a share of trading fees
-
Stay flexible with your assets
-
No centralized middlemen
Watch out for:
-
Impermanent loss—a temporary loss in value when token prices shift
-
Volatile tokens in a pair can affect your returns
B = Boosted yield through yield farming
If liquidity providing is the foundation, yield farming is the power-up.
Yield farming means taking your LP tokens (proof of your liquidity position) and depositing them into DeFi protocols for extra rewards—often in the form of governance tokens or bonus yield.
It’s like earning interest on your interest.
Popular platforms like Yearn, Beefy, or Sushi offer auto-compounding vaults that help you optimize yield without micromanaging your positions.
Pros:
-
Higher APYs than simple staking or LP
-
Compounds returns over time
-
Customizable strategies for different risk appetites
Risks to know:
-
Smart contract risk (bugs or exploits)
-
Project risk (rug pulls or unsustainable tokenomics)
C = Covered yield and safer strategies
Not ready to dive into volatile tokens? You can still earn yield using stablecoins, covered strategies, or liquidity pools designed for lower risk.
Platforms like Aave or Compound let you lend your assets and earn interest while maintaining control over your funds. These aren’t just safer—they’re also great for passive income without worrying about price swings.
Other smart options:
-
Liquid staking (like Lido or Rocket Pool) gives you a staked token you can use elsewhere while still earning.
-
Stablecoin LPs on platforms like Curve let you provide liquidity without heavy volatility.
-
DEX+ on Toobit (shameless plug, we know) helps you access trending tokens and manage assets with zero wallet setup and full on-chain visibility.
The takeaway: DeFi is a yield playground
If you’re only staking, you’re barely scratching the surface. DeFi is full of ways to earn yield—some simple, some more advanced—all depending on your comfort level and the assets you're holding.
Start small. Learn as you go. The key is to understand how each strategy works and pick what fits your goals.
You don’t need to be a DeFi degen to get started. You just need to be curious.
Want to explore more?
Check out Toobit’s DEX+ for instant access to on-chain tokens and trending assets—without needing a separate wallet. Whether you're staking, farming, or exploring new protocols, we’re here to help you earn smarter.
Share
