The growth of decentralized finance (DeFi) has exploded over the last year, beginning with less than $1 billion in total locked value to almost $20 billion currently. DeFi has created transactional opportunities that were previously impossible without blockchain technology, unlocking additional value for users that was previously captured by third parties. With the explosion of DeFi applications, more cryptocurrency users are discovering ways to generate additional yield on their cryptocurrency holdings, both actively and passively.
Examples of how a user can generate additional value through DeFi is by providing liquidity to a decentralized exchange or insurance platform, lending their cryptocurrency, or by staking. Staking is the process of locking up tokens in a network in order to help validate transactions and to serve as collateral against bad actors who may try to exploit the network.
How Does Staking Work?
There are a few methods that allow for a blockchain network to verify its transactions, with the two most popular being Proof-of-Work (PoW) and Proof-of-Stake (PoS). PoW, the verification method the Bitcoin blockchain uses, requires specialized computing equipment and large amounts of electricity to validate transactions and for miners to receive rewards. With PoS, no specialized equipment or power is needed; all that is required is the native currency of the network to be used as collateral. With this method, users can participate in validating the network’s transactions and receive rewards by locking their tokens into a smart contract. If a malicious staking party tries to take advantage of the network, they are punished by having a portion of their stake slashed.
With Ethereum moving to a PoS verification model, ETH owners have a new way to generate yield on dormant ETH. Now, all that is required for a user to earn a yield on their holdings is to lock Ether into the ETH 2.0 staking contract for a fixed period. While Ethereum is a widely used and established crypto network, many much smaller networks have also implemented staking. Some of these platforms offer extremely high annual returns when compared to traditional finance, albeit with more inherent risk. Until now, there hasn’t been a way to stake funds in a smaller network while simultaneously being able to use that value to generate yield on a more established platform like Ethereum. This is where RAMP DeFi comes in.
Gaining Additional Yield
The DeFi sector is still in its infancy, but the amount of innovation in the space is breathtaking, with original new projects popping up on a regular basis. With the focus on DeFi revolving around Ethereum, the largest decentralized smart contract platform, many users want to get involved in the ecosystem but are hampered by having their money tied up in other networks. A solution has arrived courtesy of a platform that allows users to unlock the value staked in non-Ethereum networks: RAMP DeFi.
RAMP DeFi is a novel platform that allows its users to take full advantage of the value of their staked tokens. With RAMP, a user can actively extract the value staked on a non-Ethereum network and bridge the asset onto the Ethereum blockchain, enabling them to remain their stake while also having the ability to generate additional yield. Since the majority of DeFi activity takes place on the Ethereum network, this allows stakers in other networks to get the best of both worlds.
If a user is technologically savvy and willing to experiment, there are a lot of new ways to generate impressive yields on cryptocurrency holdings. As DeFi becomes more mainstream and accessible, new methods are being created to increase value, such as unlocking additional liquidity from staked assets. Innovations such as RAMP allow users to push the envelope and experiment with different methods to increase the profitability of their assets. The result? More crypto earnings and more opportunities to generate a passive income.
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