In this video, I’m going to share with you how one of the members of our Discord group recently earned $17,000 from a $250 investment specifically from something I said in a past video that was posted right here on the channel. Before I continue, to get any lawyers off my back, this video is definitely not financial advice, it is purely educational to teach about stuff you may not already know. In fact, all I’m aiming is to be a bright light, as we go down this rabbit hole together.
Welcome to whiteboard crypto, the #1 Youtube channel for crypto education and here we explain topics of the cryptocurrency world using analogies, stories, and examples so you can easily understand them. In this video we are going to explain how to make money with crypto, specifically in the least riskiest way possible, using something that is so new that the hedge funds haven’t diluted the free money. This new thing is called DeFi.
Buying and Selling vs DeFi
Before we continue, I want to share with you something that I have learned by calling a bunch of our discord members personally. Almost everyone that I’ve talked to, initially thought that to make money with crypto, they would have to buy and sell it. You know, buy low, wait for Elon to tweet about it, then sell for a nice and comfy profit. To me, this is kinda sad, because most people lose money with this route. It’s also sad because there’s a much better route, one that you just have to be introduced to, and then immediately your eyes are opened.
I’m here to open that new world to you, to show you how I’m currently making money with my crypto, but in a way that it won’t matter if there’s a 50% dip tomorrow. In fact, if there is a dip, I’ll probably make even more.
Let’s dig in.
The first way to make money in DeFi is by lending. This means letting other people borrow your crypto. Now, I know what you’re thinking, “I already knew about that! There’s blockfi referral links everywhere!”. This is not DeFi. In fact, this is CeFi. DeFi stands for Decentralized Finance, which is a fancy way of saying it’s not controlled by anyone. You actually control your money, you can move it when you want, immediately, and without anyone approving it. With Blockfi, you are actually giving your money to them, they have like a 24 hour waiting period to withdraw, and technically they have to approve it. Nevertheless, their current rates are like 7%. Might as well invest in the stock market, right? Even worse, they keep lowering their rates!
Now, it is not uncommon to se 30%+ rates in DeFi, and I can personally guarantee you that if I were Blockfi, I would take your money, and invest it in these 30% platforms, and then give the 7% back to you, earning a ridiculous profit without telling you.
Here’s the three benefits to lending with true DeFi.
DeFi will probably always have higher rates than traditional finance. This is true for many reasons, of which the big one is who can access them. My grandma can walk into a bank and say she wants to save some money and earn an interest rate, but she definitely can’t install metamask and deposit her money into Curve Finance.
Another big reason is that there is constantly more and more money being thrown into crypto and Decentralized Finance projects. As more money is being thrown into it, it’s got to go somewhere. In fact in some places, money is being given out for FREE simply to people using certain applications, but we’ll talk about this later in the video. To wrap up my point here, 30% APY is very common, while some other projects offer up to 100% just for lending your tokens.
My favorite benefit of Decentralized Finance is the control you have over your own money. If I deposit my money to BlockFi, they own the money. They could send it to some company overseas, get sued by the US, declare bankruptcy, and then there would be some guy on a yacht somewhere smiling that my crypto bought him some $100 steak or something. With DeFi, the only person who can send your funds… is the person with the private keys, and if you don’t share your private keys with anyone, that person is only you. The government can’t even step in and be like “we’re taking your crypto”. Unless they force it out of you, there’s nothing they can do to get it. So along with DeFi lending offering much higher rates, and having 100% complete control over your money, let’s get into the last part, which is what makes this much safer than any other lending platform.
It’s all collateralized
All crypto loans are collateralized. You know how in 2008, we had the big Mortgage Crisis? To sum it up, this happened because people were taking out loans that they could never pay back. You can’t do this in crypto. In fact, every loan is collateralized. Technically, they are overcollateralized. You might be wondering “what does this mean, and why?”. Well, it means if you want to borrow $100 in ethereum, you must first deposit $120. This way if something like the Mortgage Crisis happens and prices go all wonky or you can’t pay it back, the lender will always have access to your initial deposit.
If there’s ever a point in time where what you borrowed is less than what you have deposited, you will be liquidated, meaning you’ll get to keep the money you borrowed, but the initial investment will be given to the lender. For us, that means if we want to lend out our crypto, there will always be money there backing it. If you want to know why you would deposit $120 to borrow $100, the answer is simple.
Maybe you want to deposit Ethereum and borrow USDC, creating a leveraged position, or maybe you want to deposit USDC and borrow Ethereum, creating a margin position. Either way, it means that for us lenders, we make money for the rates that the borrowers pay us. This is probably getting confusing if you’re new to this, so let’s move on.
There are two big lending applications in the DeFi world, and they are called AAVE and Compound, but this video is just to lead you down the hole. If you want your hand held, well just stick around for the end of this video and I’ll give you that option.
2) Providing Liquidity
The next way to make money, after lending, is providing liquidity. Now, generally, providing liquidity is a little more risky, but let me explain to you what it means.
In the old financial world, the way we sold things like stocks was to literally match a buyer with a seller. A buyer put up an order and said “I’ll buy 5 stocks for $100” and then they had to wait around for a seller to agree to them, and make the trade. In crypto, we have really smart people using code and programming to make this process WAY better. In the world of DeFi, we use special algorithms, and I have specific videos on how they work, broken down so simple you could understand them, in the description below. Anyways, in the crypto world, we use pools of money. So if you want to make a trade, you go to the pool of money and say “I have this much money, how many doggie tokens can you give me?” Then it tells you, and you can agree or decline. Now, how can you make money with this? You give your crypto to the pool. Since every trader who makes a trade using this pool pays a fee, that fee will go straight to you! You’ll be earning free money, very similar to how lending works. The downside is that there’s this big nasty scary thing called impermanent loss, which means if one of the tokens you gave to the pool goes way up in value or drops a bunch, you will have not made as much money if you had just held the token. So you’re trading off potential upside and downside for the trading fee that you may earn. In many cases, the trading fee you earn for lending your money to the pool is much more than impermanent loss. Nevertheless, we are here to deliver value, so let’s go over 3 ways you can provide liquidity starting from the least riskiest.
Providing liquidity to stablecoins
The safest way to provide liquidity is to provide 2 stablecoins. This is because the price of both tokens will hopefully always equal $1. Meaning you won’t gain any price appreciation, and that the value of your initial deposit will remain stable. What I mean by this, is that you can deposit Tether, or USDT, and USD Coin together to let other people trade back and forth with your money.
Some guy comes along and wants USDT but has USDC, so the trades. Some other guy comes along and trades them back, all the while, they’re paying small fees that you earn. So even if the crypto market tanks 50% or even 80%, you’ll still have your initial deposit without a fear of losing it with the crypto crash, since the stablecoins should stay at $1.
Providing liquidity to strong pairs
Next up, you can provide liquidity to strong assets that are somewhat tied to each other, to still have exposure to these coins, while also earning the trading fees. The Curve Finance pool called aTriCrypto is a great example. You deposit 33% stablecoins, 33% Ethereum, and 33% Bitcoin, and then earn the fees that traders pay to make swaps of your money.
Generally, Ethereum and Bitcoin will trade together, as they are both big cryptocurrencies. By doing this, you can reduce your risk of one of these coins completely collapsing. You’ll also earn a decent fee because there are a lot of people trading in between these 3 tokens all the time.
Providing liquidity to risky pairs
Finally, if you really want to ape into DeFi and earn some crazy fees like 400%, you can provide liquidity to tokens that are much riskier. Usually unprecedented rewards are given incentivize people to provide liquidity to either new tokens or risky tokens. The tradeoff is that you get a very high fee, however you risk one of the tokens in the pool dropping in price significantly.
It’s also worth noting that when providing liquidity, you’re exposed to a magical effect that hardly any beginners understand called ‘impermanent loss’. This happens when you provide liquidity and the total value of your share is less than if you had simply held the tokens you provided. It matters most when a token more than doubles in price or drops by 25% or more. If you’re interested, I’ve actually coded a unique calculator to help people understand how it works. You can Google “Impermanent Loss Calculator” and then simply find our WhiteboardCrypto.com website, and by doing so, you’ll also be helping out our website on Google, so thank! On that page, I spent a lot of time making it so simple that any beginner could read through it, test out the calculator, and hopefully get a decent understanding of Impermanent Loss.
We still gotta get to how that one viewer earned $17,000, but first I need to have a talk with you about something. Now, I must say, if you’ve enjoyed this video so far, you’re going to love what else I have in store. If you want a full DeFi for Beginner’s guide, I’ve actually just created one for absolutely free. You can go to WhiteboardCrypto.com, enter your email and you’ll be sent a link to enroll. Why the email, you ask? Well, we also have a newsletter, and along with that newsletter, I’ve set up something called incentivized learning.
This means, to get people excited about crypto technology and the DeFi world, when you get the newsletter, at the end there’s a quiz. If you’re one of the first few people to actually read the newsletter and correctly answer the questions in the quiz, I will personally send you some free crypto. Actually, this last week we gave away $1000 to the lucky learners. Anyways, if that isn’t enough to convince you, we also have a discord with other giveaways, a super helpful community and in the future we plan to do AMAs and livestreams, but specifically on the discord platform. Enough shilling of our high-value newsletter and the world’s best free DeFi guide, let’s get into another way you can make money with DeFi.
This one is really simple, but the thing is you just have to know about it. For this section, I’m going to explain two sides, one is Incentives and the other is Airdrops.
So imagine if you’re in charge of advertising a blockchain network so that more people will know about it and use it. How do you do it? Well, you could buy a billboard, that might work, but the issue is 99% of people that see that billboard won’t know anything about crypto, because we’re so early. Another thing you could do is buy ads on the internet. The issue with this is that there were a ton of scams that happened in 2017 and 2018 because they would just run ads for their scam, cash out, and then hide for the rest of eternity, so a lot of places on the internet don’t allow crypto ads. Even more so, we can assume TV ads or radio ads wouldn’t work. So, what do you do?
What if you just took that advertising money and literally just gave it to the people using your blockchain? This way they get excited, and tell their friends or family, AND you can literally prove that your marketing dollars are working because they HAVE to use your blockchain to get the money. This is exactly what is happening right now in the crypto world. In fact, one blockchain called Avalanche announced something called the Avalanche Rush incentive program, where they’re giving away a bunch of tokens for free, just for using them.
When they launched it, the total amount was worth $180,000,000, but now it’s valued at over $720,000,000. The NEAR blockchain just announced an $800,000,000 incentive program too. The Fantom network is taking a different approach by offering millions of dollars to developers who create certain applications on their blockchain. Money is being given to people just for using the blockchains and trying out platforms, and you can be one of those people.
Speaking of trying out platforms, the second part of this includes Airdrops. This is exactly how that one viewer who watched a video spent $250 and turned it into $17,000. Let me explain this simple. Let’s say you’re a company, but you want to go public. You sell your shares, and people who buy your shares get access to the company’s profits, but more importantly they get a vote in the decisions of the company. If they hold a large amount, their decisions really matter. For crypto applications, they don’t have companies or stock. Instead, they have tokens.
So if you hold a bunch of tokens, you get some of the profit from the platform, and also you get to make decisions to the platform moving forward. A few weeks ago, a platform called ENS launched a token so that holders could make decisions to their platform. Instead of straight up selling it, they just said “we’re going to take a look who has used our platform, and give the users our tokens”. And they did that. That is called an airdrop, everyone who used the platform before a specific date earned free tokens. Personally, I got 213 tokens, and sold them within a few hours for a nice $5000.
The issue is, if I held them, they’d be worth a lot more, but I incorrectly assumed if everyone was getting $5000, they’d sell too. Maybe they did, but big companies like Coinbase and other large market movers bought them up. Because of this, the price spiked all the way up to $80. One of our viewers who contacted me on discord said he sold his 200ish tokens for a nice $17,000 during the peak. It was actually surreal to me when he said these exact words “It was because of your ENS video that I bought my domain”.
Anyways, this is actually the second valuable airdrop I have received. The first was for using a blockchain bridge, which we have a video on, and it was worth around $1500.
Wrapping this up, there is so much money being moved into the crypto and blockchain space that just by being around and keeping your eyes open, you can probably earn some decent money. The trade off, is that as more people get into the space, these incentives, airdrops, and even lending rates will start to drop. There will also be more scams. Regarding that, I want to make a quick note that I will NEVER contact you in the comments below. Those are scammers and impersonators, I highly recommend never to reach out to anyone in the Youtube comments. They are there to take your money. Hopefully my videos have been helpful to you, and if they have, you can support us by liking this video, hitting the subscribe button, and going down the rabbit hole that is our other video section, I promise you’ll learn something new.
As a disclaimer, don’t think that I made this video to take a poop on BlockFi, I think they are needed to get people interested in crypto, but if you have the knowledge, BlockFi is simply a third party taking your money and happily giving you some back.
As we end this video, we hope you enjoyed it, we really hope you learned something, and most of all, we hope to see you on the other videos in our channel.