Bybit Arbitrage is a trading tool that simplifies arbitrage trading by capitalizing on funding rate and price differences.

If you're seeking consistent returns with minimal risk, Bybit Arbitrage is the perfect ally.

 This robust tool empowers you to generate regular profits with minimal risks by capitalizing on price disparities across different markets. Its user-friendly interface lets you easily spot and exploit these differences, so that you can execute flawless arbitrage trading in the crypto market with confidence. Read on to learn how Bybit Arbitrage makes arbitrage trading an effortless way for you to achieve low-risk gains.

 is the buying and selling of the same or similar asset(s) at the same time across different markets to earn from slight price deviations. This act of purchasing an asset at a fixed price — while simultaneously selling it at a higher price — allows a trader to instantly make profits without any risks. 

While arbitrage trading has long been a staple in traditional financial markets, such as stock and forex, the advent of crypto trading has propelled arbitrage trading to new heights — thanks to the heightened volatility of the crypto market. Additionally, unlike traditional stock markets, crypto markets are traded 24/7, offering more opportunities for arbitrage traders to reap profits from the price gaps across exchanges and markets. 

 across exchanges or within a single exchange. Keep in mind that if you opt to arbitrage trade across different platforms, accessing your profits may prove to be complex, due to the need to transfer your assets between the exchanges, which can take up to several days to complete. On the other hand, arbitrage trading on a single platform is more straightforward — but more competitive as well.

There are multiple arbitrage trading strategies, but the most common ones in the crypto market include funding rates arbitrage, spot-futures arbitrage and futures arbitrage. 

Funding rates arbitrage allows traders to profit from variations in funding rates between 

 contracts. In contrast, spot-futures arbitrage enables traders to profit from price disparities between the spot and 

 for the same asset. Meanwhile, futures arbitrage involves profiting from price discrepancies between futures contracts with different expiration dates.

Bybit Arbitrage is a trading tool that helps traders identify arbitrage trading opportunities in two ways: funding rate and spread. 

The user-friendly interface organizes trading pairs based on either funding rates or spreads in different markets, so that traders can easily spot disparities in funding rate or price across the markets at a glance. 

Bybit Arbitrage is exclusively available to 

 mode. It facilitates arbitrage trading for USDT Perpetual, USDC Perpetual and USDC Futures contracts, thereby allowing you to enjoy arbitrage trading opportunities between USDT 

Spot pairs and USDT Perpetual pairs, or USDC Spot pairs and USDC Perpetual/Futures pairs. 

The Funding Rate Arbitrage feature exploits differences in funding rates between the Spot and Perpetual/Futures markets on the Bybit exchange. With the Funding Rate feature, traders can earn funding fees while simultaneously managing their positions in order to minimize potential losses and maximize gains through positive and negative arbitrage strategies.

Funding rates for the different trading pairs are listed in descending order. This helps traders to easily leverage the interest rate differential between Spot and Perpetual/Futures contracts.

The Funding Rate feature also allows you to 

 orders (with the same amount, but in different directions) in both Spot and Perpetual/Futures, which enables you to earn funding fees while mitigating potential losses (with potential gains).

holders in Futures/Perpetual contracts pay short position holders. You can leverage this situation by executing a positive arbitrage, which involves

 buying a Spot pair and taking a short position in 

Perpetual to earn steady funding fees. Alternatively, if the funding fee is negative, short position holders pay long position holders. In this case, you would perform a negative arbitrage by shorting a Spot pair and going long in a 

The Spread Arbitrage feature helps traders capitalize on price discrepancies between different markets for the same cryptocurrency asset. With this feature, you can easily compare the market prices of an asset traded across various trading pairs and contracts. While Spread Arbitrage may be similar to spot-futures arbitrage, it offers more arbitrage opportunities since it covers a broader range of markets, unlike spot-futures arbitrage, which targets specific markets

With Spread Arbitrage, the aim is to profit from the eventual price convergence as you buy the crypto asset at a lower price in one market (e.g., Spot) and sell it at a higher price in another market (e.g., Futures). 

As the futures price will eventually align with the Spot price when the contract expires, you’ll be able to take advantage of the simultaneous price disparity for the same asset.

In order to trade with Bybit Arbitrage, you’ll first need to 

. Currently, Bybit Arbitrage is exclusively accessible via the 

 for the web version, which will be launched soon!

Bybit Arbitrage offers multiple advantages.

Bybit Arbitrage is a powerful tool for traders seeking low-risk gains in the volatile crypto market. With its intuitive interface and exclusive features, traders can effectively leverage funding rate and price differences to maximize profits while minimizing risks. Bybit Arbitrage offers diverse benefits that make arbitrage trading more accessible and profitable than ever before.

Beginner

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How to Use Bybit Arbitrage to Achieve Funding Rate and Price Difference Arbitrage

An Ethereum Spot ETF is an exchange-traded fund that tracks the real-time price of Ether and allows investment through traditional stock markets. Learn more.

Earlier this year, the U.S. Securities and Exchange Commission (SEC) gave the green light to a number of Bitcoin Spot exchange-traded funds (

), sparking optimism that similar approval might be extended to Ethereum Spot ETFs. Adding to the excitement, news of Ethereum Spot ETF approval in Asia’s first region has heightened anticipation for a potential approval and launch in the U.S. However, despite the buzz, some industry observers remain skeptical. This article explores the potential impact of Ethereum Spot ETF approval on the broader crypto market.

An Ethereum Spot ETF is an exchange-traded fund that tracks the real-time price of 

 and allows investment through traditional stock markets. It offers investors a way to invest in Ether without having to actually buy or hold the asset itself.

An Ethereum Spot ETF operates by pooling investor funds to purchase Ether, which is held in reserves by the ETF.

Rather than navigating the complexities of 

 and exchanges, investors buy shares of the ETF through regular brokerage accounts, just as they would with traditional stocks. These shares represent a stake in the Ether held by the ETF, providing a simple and regulated way to own Ethereum indirectly.

In order to create ETF shares, authorized participants — usually financial institutions — purchase Ether in exchange for ETF shares of equal value, which are then sold onto the market. An authorized participant can also redeem shares by buying enough ETF shares and exchanging them for Spot Ether and taking those shares away from the market.

As a result, the price of ETF shares tends to fluctuate in line with Ethereum's Spot market price. If it didn’t, there would be an 

 opportunity to profit from any mispricings in the ETF price. However, it’s still theoretically possible for the ETF to trade at different prices simply because of supply-and-demand factors.

ETFs as securities are regulated by the SEC, so an Ethereum Spot ETF provides a regulated product that investors can purchase. By contrast, Spot Ether is being investigated by the SEC to determine whether it should be classified as a security, and currently lacks regulatory clarity. 

This setup offers numerous benefits for investors. It simplifies the investment process, allowing anyone with a brokerage account to invest in Ethereum without setting up a crypto exchange account or managing storage. This can save time and give some investors greater peace of mind. An ETF structure also provides the regulatory clarity that institutional investors need, which can enhance liquidity and trading volumes.

Security is paramount in the realm of cryptocurrency, and the ETF provider takes it seriously. To safeguard Ether holdings, ETF providers employ a combination of 

 and insured custodial services. As a result, they could potentially minimize the risk of theft or loss that individual crypto investors may encounter.

The Ethereum Spot ETF bridges traditional finance (TradFi) and the exciting (but still growing) cryptocurrency space. It offers the security and ease of trading associated with traditional financial markets while opening up investment opportunities in Ethereum for a broader audience.

Both excitement and regulatory scrutiny characterize the current landscape of Ethereum Spot ETFs. Major financial institutions like 

 and Fidelity have submitted applications for these ETFs to the SEC. Still, decisions have been delayed, with the next 

If applicants begin updating their filings by April, this may indicate they’re incorporating feedback from the regulator, which could be interpreted as a positive sign. However, a lack of updates to filings could indicate that the SEC isn’t maintaining the same level of discussions with issuers that led to its 

Another challenge is that the SEC is still investigating whether Ether should be classified as a security, especially since it transferred its consensus mechanism to 

. Earning rewards through staking could meet criteria that determine whether an asset is a security. Ethereum also provides a foundation for 

 (DeFi), which could add to the complexity of the review. 

Analysts' opinions vary regarding the likelihood of ETH ETF approval. One Bloomberg analyst, for instance, 

 chance of approval by May. However, the SEC's recent silence might hint at a less favorable outcome.

The approval of Ethereum Spot ETFs is eagerly awaited because it could mirror the impact of Bitcoin Spot ETF approval, which led to an influx of capital in the market. It would mark a pivotal milestone, likely to attract increased investment and further validate cryptocurrency. The crypto community is closely monitoring these developments, as the coming months will be crucial in shaping the future of Ethereum investment opportunities.

 was recently given to the first Spot Bitcoin and Ethereum ETFs in one of the Asian regions. This landmark decision positions the city as a trailblazer in the Asian financial landscape, embracing the integration of popular cryptocurrencies into mainstream investment avenues.

This milestone has sparked excitement within the crypto community, indicating a positive reception toward digital assets in that region. Analysts believe this move could set a precedent for other jurisdictions to follow, potentially leading to broader acceptance and recognition of cryptocurrencies as a legitimate asset class.

These newly approved ETFs are expected to attract a wave of fresh investors — both retail and institutional — by offering a regulated and familiar investment option for exposure to cryptocurrencies. This growth of interest could increase stability in the crypto markets, possibly influencing the price movements of Bitcoin and Ethereum in the region.

The timing of this approval is noteworthy, considering that the U.S. could also be on the cusp of approval of an Ethereum Spot ETF. If this proactive approach inspires other financial centers beyond the U.S. to consider similar approvals, it will palpably contribute to the global expansion and maturation of the cryptocurrency market.

Current Impact of Ethereum Spot ETF Applications on the Crypto Market

The buzz surrounding Ethereum Spot ETF applications is noticeably affecting the crypto market, particularly Ethereum's price and overall sentiment. Submission of new ETF applications to the SEC has coincided with an 

, pushing it to around $3,700. This uptick reflects the market's optimism and positive sentiment regarding the potential for easier access to Ethereum. However, the market has exhibited some volatility as well, with Ether dropping over 14% in a week in early April. 

Despite these fluctuations, there's a general expectation that ETF developments would significantly impact Ethereum's price dynamics, similar to what was observed with the recent Bitcoin Spot ETF approvals. Moreover, the recent approval of cryptocurrency ETFs has further fueled optimism and positive expectations for increased investment inflows and a broader recognition of cryptocurrencies.

To sum up, the current impact of Ethereum Spot ETF applications on the crypto market is marked by heightened anticipation along with some volatility. Ethereum's price is responding to changes in the regulatory landscape and the potential for broader adoption of cryptocurrency-based investment products.

What Will It Mean if an Ethereum Spot ETF Application Is Approved?

The approval of an Ethereum Spot ETF application by the SEC would mark a significant milestone for the cryptocurrency market, especially for Ethereum. Following are some of the potential benefits.

Drawing parallels to the earlier Bitcoin Spot ETF approvals, some pundits expect an initial surge in Ethereum's price following the expected announcement, reflecting renewed confidence and interest in Ether as an asset. Over the long term, Ethereum Spot ETFs could contribute to growth and stability, similar to the impact that Bitcoin Spot ETFs have had on BTC’s price.

However, there are key differences to consider. The SEC's cautious stance on Ethereum — notably because of its PoS consensus mechanism — could influence the approval process and subsequent market reactions. In addition, Ethereum's unique ecosystem, including its role in DeFi and 

, could lead to different market responses as compared to those following the Bitcoin Spot ETF approvals.

The potential approval of Ethereum Spot ETFs is a crucial turning point for the crypto market, promising easier access, increased investment and greater legitimacy. Although short-term price fluctuations may occur, the long-term effects could echo the positive growth recently witnessed with Bitcoin Spot ETFs, promoting a more mature investment environment for Ethereum.

Intermediate

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Ethereum Spot ETF Approval: Its Impact on Crypto Markets

Grayscale Investments has filed a registration statement on Form S-3 with the SEC to register shares of its Grayscale Ethereum Trust (ETHE) as part of efforts to uplist the trust to a spot Ethereum ETF on the NYSE Arca.

Daily Top Performer — Automata Network (ATA)

The SPX index is up 0.02%, investor focus on earnings and U.S. interest rates continues. The broader cryptocurrency market is down, with Bitcoin and Ether dropping by 3.78% and 2.41%, respectively in the past 24 hours.

Today’s outperformer is ATA, which jumped 8.9% after Automata launched Multi-Prover AVS on Eigenlayer Holesky Testnet to boost decentralized security.

Automata Network (ATA), founded in 2019, is a Web3 platform providing private web services for decentralized applications, focusing on secure, anonymous transactions and governance. Key features include a private voting system and MEV minimization to enhance user privacy and security. Automata's Multi-Prover AVS, which utilizes TEE Coprocessors to enhance security, is now available on the Eigenlayer Holesky testnet. This system employs the TEE Prover as a secondary security measure in decentralized systems. Operators, restakers, and developers are encouraged to learn more about this advancement on their website.

Check Out the Latest Prices, Charts, and Data of 

Grayscale Investments, the world's largest crypto asset manager, has filed a registration statement on Form S-3 with the SEC to register shares of its Grayscale Ethereum Trust (ETHE) as part of efforts to uplist the trust to a spot Ethereum ETF on the NYSE Arca. This filing follows NYSE Arca’s application and is a crucial step in the regulatory process required for offering shares continuously upon approval. The shares will not be sold until the registration is declared effective, and this offering is subject to the Securities Act of 1933. Grayscale emphasizes that the trust, not registered under the 1940 Act, involves high risk and volatility, is focused solely on Ethereum, and does not offer direct investment in Ethereum.

BlackRock's spot bitcoin ETF, IBIT, has significantly impacted the firm's overall ETF flows, comprising 24% of its total. Eric Balchunas, Bloomberg's Senior ETF Analyst, highlighted the fund's success during a panel on Hong Kong's newly approved spot crypto ETFs. Since its launch in January, IBIT has attracted consistent inflows for over 70 days, accumulating more than $18 billion in assets under management and becoming one of the most successful ETFs in history. The IBIT fund is second only to Grayscale's ETF in terms of assets but has seen remarkable trading volume along with other spot bitcoin ETFs, totaling nearly $230 billion.

Gamium, supported by Parachain Ventures, DAO Maker, and Mr. Beast among others, has its token $GMM listed on major exchanges with a fully diluted valuation of around $43M. The platform is promoting a beta points airdrop to reward early users, where participants can sign up and earn points through various activities like launching an MST, trading, daily logins, and referrals. Details on point earning and distribution are available in a dedicated blog post. However, potential users are cautioned to research due to the inherent risks associated with DeFi protocols and trading.

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Grayscale Files for SEC Registration to Convert Ethereum Trust into a Spot ETF on NYSE Arca

Sharky is a Solana-based lending and borrowing DeFi solution that utilizes NFTs as loan collateral.

Cryptocurrency lending and borrowing has always been a prominent niche of the decentralized finance (

) industry, championed by platforms like Aave (

). A much rarer variant of DeFi borrowing and lending is based on non-fungible tokens (

Sharky.fi, or simply Sharky, is a Solana-based lending and borrowing protocol that uses NFTs as collateral to facilitate the DeFi processes on the network. By putting up NFTs as collateral, users can borrow funds via short-term loans in Solana's native SOL tokens. For lenders, the platform is also a great way to earn high APY rates in just 7 to 14 days, while having their loaned funds protected by the NFTs.

Having established itself as the leader of NFT-based lending and borrowing on Solana, the Sharky project has ambitious plans to integrate two more highly popular crypto asset types — Ordinals and real-world assets (RWAs).

 (SHARK) is a lending and borrowing app on the 

 (SOL) blockchain that lets users provide NFTs as collateral to access short-term loans in SOL tokens.

 Lenders can view NFTs offered as collateral, and make loan offers secured by their preferred NFTs.

Although Sharky's public launch on the Solana mainnet dates back to April 2022, the platform operated without its 

, SHARK, for its first two years in the market. The SHARK token was eventually launched in mid-April 2024.

Using its innovative business concept, Sharky quickly established itself as the leader of NFT lending. According to the project’s team, Sharky has a 90% share of the NFT lending market on Solana and has issued more than 1.4 million NFT loans.

Following the recent launch of its SHARK token, the project aims to integrate additional crypto asset types in the future. These include 

 (RWAs). Another ambitious product type considered for future implementation on the platform is uncollateralized consumer loans.

As a lender on Sharky.fi, you can browse NFTs from a variety of collections offered on the platform and make a loan offer for potential borrowers. The collections available on Sharky include the platform's own 

 collection, Mad Labs, Solana Monkey Business (SMB), Tensorians, Namaste and more. Lenders’ offers are shown to potential borrowers on the platform, who then choose the best offer based on their borrowing needs.

The NFT provided by the borrower is used as collateral, and the lender makes their funds available in SOL tokens. Lenders earn interest on the funds, with the loan duration typically between 7 and 14 days. Interest rates, naturally, will vary depending upon on-platform activity. Usually, 

 for active loans range between 120% and 220%, though they can go up to 360%. As such, Sharky loans are an excellent way for lenders to earn some serious interest quickly. If a borrower fails to repay the loan in full, the NFT used as collateral is transferred to the lender.

For borrowers, the Sharky platform is an excellent opportunity to access SOL funds for short-term needs quickly and flexibly using their NFTs, rather than cryptocurrency, as collateral. The best part of the platform's borrowing mechanism is that you remain in possession of your NFT during the loan period as a borrower. While your NFT is used as collateral, its ownership isn't transferred to the lender while the loan is active. The ownership transfer may only happen at the end of the loan period if you fail to repay the loan in full.

Maintaining the ownership of your NFT allows you to keep using it on various DeFi and other apps for purposes such as staking or satisfying 

 eligibility requirements, among other potential uses.

Sharx is the platform's own NFT collection. One of the most popular collections used in Sharky's lending and borrowing operations, sharx is made up of 10,111 adorable shark characters. Purchasing a sharx NFT not only opens up borrowing opportunities but also entitles you to upgrade or boost your Chowder points, rewards that are used in Sharky's loyalty program. 

As a sharx holder, you're entitled to the airdrop of Sharky.fi’s governance token, SHARK, and you can also stake sharx to earn FISHY tokens.

The newly launched SHARK token is envisioned as the platform's governance asset, with a total supply of 100 million. As of the time of writing in late April 2024, only some specific details on the actual governance processes powered by SHARK are available. Thus, the token's actual use in on-platform governance is expected to be outlined in the future.

SHARK will be airdropped in two phases, with 4.25% set aside for the first phase and 3.5% for the second. Of the former, 70% is allocated to its community, with the remaining 30% is distributed to partner communities. Meanwhile, the second phase is held as a staking pool event with a lockup duration of 30 to 60 days exclusively for OG, new users and sharx holders.

 of Sharky. Unlike the brand-new SHARK token, FISHY was issued back in 2022 at the start of the platform's operations. FISHY can be earned by staking sharx NFTs, accumulating reward points and participating in Sharky's social media campaigns. The token can be used to boost sharx NFTs, which in turn can earn you additional Chowder points. FISHY also gives you access to NFT raffles and auctions held on Sharky.

The SHARK token can be bought on Bybit through a Spot pair with USDT (

). Additionally, you can also take part in Bybit's current campaigns for the token for the chance to grab a share of the 

, which includes a Token Splash event featuring 456,000 SHARK through Apr 30, 2024, 9AM UTC, and a Lucky Draw with 58,000 SHARK in rewards through Apr 30, 2024, 9:59AM UTC.

Lending and borrowing using NFTs as collateral is a novel concept that has earned Sharky leadership positions in this niche. As more platforms adopting this business model emerge, the competition in the field is likely to intensify. However, as of now, Sharky remains the absolute leader of the Solana-based NFT lending and borrowing market. 

As NFTs experience a resurgence in popularity following the post-2021 dip, DeFi solutions that make innovative use of these assets, such as Sharky, stand to benefit. Later in 2024 and beyond, we’ll likely hear more about NFTs being used as legitimate collateral in crypto finance — a new trend helped to no small degree by the Sharky platform.

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Sharky.fi (SHARK): The Decentralized Platform for Instant NFT Loans

DeFi

Investing

DeFi's key performance indicators help measure the potential of a DeFi project based on the fundamental metrics. It determines if the protocol is over or undervalued. Explore now.

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With the rise of smart contracts platforms like Ethereum, a wave of decentralized finance (

) has entered the financial market, making the concept popular among investors.

It’s easy to see why DeFi is getting so much hype, since it aims at facilitating cheaper and faster financial transactions with a more transparent framework.

In the sea of investment opportunities, it’s crucial to have a standard against which to measure a project’s performance. This is the purpose of key performance indicators: they allow you to identify which project will be lucrative in the future.

Did you know that the DeFi market recently hit a historic all-time high with over 

The question is, how can you get a piece of this thriving industry? In this guide, we’ll list some of the key performance indicators to use for obtaining 

 to measure a project’s intrinsic value.

DeFi is a term describing financial services accessible to anyone on a public decentralized blockchain network. It allows users to create self-executing 

 on blockchains. The highlight of DeFi is the freedom from interference by centralized authority, which traditionally controls a transaction

The freedom of DeFi has also given rise to the use of non-fungible tokens, which fetch hype from retail investors and institutions. Looking at current trends in the DeFi space, it’s easy to say that the industry is set for accelerated market growth. In 2019, the market capital for DeFi products was only $700 million and grew to a market valuation of over a 100 billion, according to industry data.

Compared to traditional finance, DeFi aims to reconstruct financial services like trading, lending, payment, and insurance with a more decentralized approach via blockchain. DeFi uses distributed consensus within the smart contracts that allow peer-to-peer transactions without involving a central authority. For example, DeFi enables a more efficient cryptographic verification process in lending and borrowing through the smart contract integration that defines and monitors the loan. 

While there are plenty of DeFi alternatives to traditional financial services, the use of this technology stretches beyond lending and transacting. Here are some of the use cases: 

Cryptocurrency and DeFi go hand in hand. DeFi products are aimed at recreating traditional financial instruments with cryptocurrency, primarily on the Ethereum blockchain.

DeFi products operate without a centralized authority, such as an exchange, trade union, or bank. Cryptocurrency is the driving force of DeFi products since most of them don’t use fiat currencies.

Suppose a DeFi product recreates the traditional “personal loan” given by banks. A DeFi lender gives you a loan in cryptocurrency and earns interest on it. The interest rate is lower and more attractive than a conventional bank’s.

Moreover, a borrower’s chances of getting the loan are also significantly higher, since they often only have to offer crypto asset collateral, such as an NFT.

Now that you understand the basic concepts, let’s discuss how to invest in DeFi by considering key performance indicators.

Here are some DeFi Indicators to know about:

Total Value Locked, staying true to its name, means the total number of tokens in a DeFi protocol. The total value locked in a protocol can be measured using crypto or USD.

In a particular marketplace, TVL is the sum of total liquidity in the liquidity pool. TVL is often used in combination with the 

, which is calculated by multiplying the value of tokens by their price in USD.

As a rule of thumb, the lower the TVL, the more undervalued a DeFi project is. However, there’s more to consider besides the TVL when making a decision. 

While DeFi aims to decentralize financial operations, it’s still essential for you to check the supply of tokens on centralized exchanges. If an abundance of tokens is held at the exchange, it points towards a significant sell-off in many cases. 

As a result of such a sell-off, the token tends to destabilize. Thus, it’s imperative to look for these signs while performing due diligence on your cryptocurrency. However, things don’t always turn out this way, and you also need to weigh token supply and other DeFi indicators when making a decision.

The token supply doesn’t always indicate a large number of withdrawals from wallets. You also have to look at the balance movements of the token on the exchange.

Keep in mind that it’s characteristic of crypto trading to move tokens from personal wallets to exchange accounts, and vice versa.

Only a highly uncharacteristic or significant movement should tip you off when making decisions about DeFi tokens.

Most DeFi protocols have rules in place to ensure the token supply doesn’t cause inflation, leading to the devaluation of the DeFi tokens. However, this doesn’t apply to every token.

While some projects don’t clearly explain the mechanism of maintaining a limited token supply, others don’t even have any coherent information on the subject.

Therefore, when you’re selecting a protocol, look at whether a token is susceptible to inflation. If the answer is yes, it’s best to stay away.

If a large number of unique addresses are holding a particular token, that could mean it’s growing in popularity and is being adopted 

. As an investor, you can use this as a metric to determine the relevance of an asset.

However, it’s also important to note that a single user can create many addresses, keeping their funds in separate accounts. That could give the false impression of a token being widely used.

So, be wary when using this metric. It’s best to use it along with other key performance indicators, as discussed in this article.

Today, there are thousands of cryptocurrencies available that have expanded into the DeFi market, saturating it and making it difficult for investors to differentiate between potentially lucrative projects and quick cash grabs.

That’s why you need to use key performance indicators to determine the value of a project.

Once you understand the insight metrics give you into tokens, it’s time to learn how to invest in DeFi.

Possibly the most common method of investing in DeFi is through trading tokens. The Ethereum blockchain has thousands of tokens. You can trade tokens on decentralized exchanges whenever you want.

In this way, you don’t lose control of your assets. Think of it as exchanging your fiat currency when you go to a different country. The difference with cryptocurrency, however, is that the DeFi version always remains open. Because of the stellar technology available, there will always be someone to accept your trade.

Suppose you have ETH in your wallet and you want to exchange it for 

, which is a no-loss lottery. Here’s how it works: you use 100 Dai tokens to buy 100 lottery tickets. With this purchase, you get 100 Pool Dai (plDai).

Now, if one of your tickets wins the lottery, the balance of your plDai will increase per the prize pool’s amount.

If none of your tickets win, then they’re added back to the next draw. You can withdraw the amount equivalent to the Dai you initially used for buying the tickets at any time you want.

With DeFi trading, you can trade your ETH for Dai and partake in the lottery. Once you’re done participating, you can trade your ETH back. So, what’s the benefit here? Simply put, you may win the lottery.

 allows borrowers to obtain crypto in a trustless and transparent manner without the interference of an intermediary. A lender can enlist their coins on a decentralized platform, and a borrower can then take the loan directly from them. The process is called peer-to-peer lending, since no third party is involved in the process.

It differs from traditional lending in the following ways:

How do you earn money from DeFi lending? It’s pretty simple. When they borrow, they pay interest; when they lend, they earn interest. 

As a holder of the assets, you can lend them to borrowers to earn interest on the loan. When a borrower takes out a loan, they need to over-collateralize (deposit) their assets for the loan they want via a smart contract.

For example, suppose you want to borrow 1 BTC. In that case, you’d need to deposit a higher value of collateral than the current bitcoin price to receive 1 BTC. So that you won’t be liquidated when your collateral drops below the original value. When the contract is over, you’ll need to pay back the borrowed BTC and the interest rate to receive your collateral back. Anyone could be a lender in DeFi, and by loaning your crypto assets, you’ll get your fund back after the lending period is over, along with interest.

The value of your cryptocurrency might appreciate or depreciate with time as the market changes. However, if it simply sits idle in your wallet, it won’t gather any interest at all.

On the other hand, if you enlist your crypto on the exchange, you can earn interest on the currency and enjoy the price hike if the market goes that way. Another benefit of DeFi lending is that it’s permissionless.

This means you could have any amount of coins — and be sitting in any geographical location in the world — and still lend your money.

Here are some platforms you can use for DeFi lending:

 is a noncustodial, open-source liquidity protocol built on the Ethereum network. The protocol uses a 

 that is governed by the AAVE token holders who vote for the changes. Aave has a pool of over 20 

, including DAI, USDT, USDC and it offers flash loans that you can borrow crypto without collateral using the pool-to-peer lending mechanism. When a user provides liquidity in the liquidity pool, the deposited funds in the protocol are open for lending.

So, if you deposit Dai into the pool, you’ll receive aDai. As a token holder (lender), you’ll earn interests on the aTokens while borrowers pay interest rates depending on the amount they are borrowing. 

 is an autonomous algorithmic protocol in which you can lend your tokens to borrowers, earning interest while being able to transfer, trade, and use for other purposes. While the loans can be paid back and locked assets can be withdrawn at any time.

The difference between Compound and traditional finance is that it allows users to spend the money earned in savings while saving it. For example, locking up your USDT in the protocol can help you tokenize cDai, which earns you interest. But at any time, you can withdraw your cDai for Dai with accumulated interest. Compound allows users to borrow or lend BAT, DAI, ETH, USDC, WBTC and more.

 is simply a way for your existing crypto to make more crypto.

You lend your funds to other users through contracts and get a fee in return for your service. The fee is in the form of crypto, so it increases your earnings.

In yield farming, you’re a liquidity provider, adding funds to the platform’s liquidity pool. In return, you’ll get a reward, which comes from the fees the DeFi platform takes from the users.

Yield farmers tend to use strategic tactics, moving their funds to different protocols to earn higher yields. Considering this, DeFi platforms also offer them economic incentives to stay on their protocols.

However, yield farming also comes with its risks. The most apparent risk is smart contracts. Most protocols are developed by small teams who work with limited budgets.

A more notable risk from yield farming is composability, which is also actually an advantage of DeFi. DeFi protocols can integrate with each other. The ecosystem thus relies on all of the building blocks so that the protocols can work together.

The risk here is that even if one building block is malfunctioning, the whole ecosystem suffers. Because of this, yield farming is considered suitable for advanced crypto experts.

Bybit offers a significant number of tokens and trading pairs to help users purchase and trade for tokens like Avalanche (AVAX), Aave (AAVE), Chainlink (LINK), Compound (COMP), Dydx (DYDX), Fantom (FTM), Polkadot (DOT), Sushiswap (SUSHI), Serum (SRM), Terra (LUNA), Uniswap (UNI).

Alex Alexandrov chairman of CoinPayments and co-founder of Velas,

, “Once it becomes mainstream, and different aspects of DeFi trickle into everyday life and everyday finance, it will impact everyone — from the tech-savvy to those like grandma who don’t otherwise understand what’s going on behind closed doors.”

Therefore, it’s about time to learn how to invest in DeFi and expand your portfolio to include this new wave of tech-led financing.

In doing so, make sure you’re using key performance indicators to make the right decisions. While risk is inevitable in DeFi, you can definitely minimize it by studying the metrics beforehand.

On top of that, there are different investing methods, such as DeFi lending, staking and yield farming, giving you a wide range of income opportunities. Hopefully, this guide has given you a clearer idea of how DeFi works, and how to invest in the space without putting yourself at too great a financial risk.

How to Invest in DeFi Using the 5 Key Performance Indicators (KPI)

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Grab Up to 5,000 USDT in Rewards