How Experienced DeFi Traders Can Leverage Their Success for Additional Revenue Streams

The DeFi market has minted several millionaires since DEXs such as Uniswap and lending platforms like Compound made their hallmark debut in 2020. Currently, the total DeFi market cap stands at $65 billion, while the 24-hour trading volumes are at $7 billion.

These figures are a testament to the vibrancy of this nascent market. Today, there are quite many investment firms whose sole focus is on DeFi products – this was not the case during the DeFi summer when retail traders dominated the market.

More importantly, DeFi traders now have numerous opportunities to generate passive income as opposed to solely focusing on speculative trading. Of course, asymmetric bets can be highly rewarding but at the same time brutal when the market suddenly tanks as witnessed recently by fears of a U.S. recession and Japan’s macro turbulence.

DeFi’s total value locked (TVL) dropped from $98 billion to $85 billion within a week, while north of $1 billion was liquidated across the larger crypto market. Times like these call for alternative strategies – even the best are sometimes not spared.

So, what other options are there for native DeFi traders to earn an income even during turbulent market periods? In the next section of this article, we will highlight how successful DeFi traders can leverage their success for additional revenue streams.

Asset Management – Token Baskets 

Similar to traditional finance, it is now possible for DeFi traders to create ETF-style products and earn a management fee. The Mosaic Alpha platform is one of the few decentralized solutions that is currently leveraging automated smart contracts to enable the curation of what is known as a ‘token basket’ by experienced DeFi traders.

Instead of keeping one’s trading strategy to themselves, Mosaic’s decentralized platform allows both DeFi asset managers and veteran traders to share their expertise through curated token baskets. Newbies or less experienced crypto investors can then use these token baskets as an index to invest alongside the experts. In return, the owners of the token baskets generate a passive income from the fees collected while also building a loyal following.

What particularly stands out about Mosaic’s token basket management is the ease of getting started; unlike traditional finance where there are several hurdles before one can become an asset manager, Mosaic Alpha only requires a digital wallet and some KYC documents. 

Educational and Influencer Content 

The DeFi ecosystem is still in its development stage; for context, the S&P 500 currently enjoys a market cap of $45 trillion, gold is at $16 trillion, while DeFi only accounts for a mere $65 billion. This means that there is a huge knowledge gap that exists and will likely take a long time before DeFi catches up with traditional markets. Who better to equip future potential DeFi users than those with experience?

Creating educational content is another way that traders can kill two birds with one stone; on one hand, it is a contribution to growing the industry’s knowledge, while on the other hand, one could earn as much as $0.25 per word while doing it. The rates are even better for influencer content if one happens to be a trader with a huge presence on Crypto Twitter.

Developing Trading tools & Algorithms

Being ahead of the curve means embracing modern-day technologies, not just crypto but also the likes of Artificial Intelligence (AI). According to the latest data, the AI trading market was recently valued at $14.42 billion, with other projections showing it could grow past $50 billion within the next decade.

So, where exactly is the opportunity for DeFi traders? If your trading strategy is successful, there are multiple ways you can share it besides the decentralized asset management model mentioned above. It is possible to develop an algorithm or trading bots whose execution is coded to mimic one’s DeFi trading strategy.

Of course, it will likely cost a few bucks for those who do not have technical experience in coding such products. However, it can be equally rewarding; some of the services that currently exist in the industry are charging as much as $80 monthly, which could translate to a lucrative income if the subscription base expands significantly.

Staking and Restaking 

DeFi traders can also generate passive income from their idle assets by staking them on Proof-of-Stake (PoS) blockchains such as Ethereum, Solana, and Avalanche. As of writing, the reward rate for staking on these chains is as follows: Ethereum (2.58%), Solana (6.96%), and Avalanche (7.95%). 

Even more intriguing, it is now possible to restake staked ETH or other Liquid Staking Tokens (LSTs) through staking platforms such as Eigen Layer. This means that DeFi traders can further generate additional income from their staked tokens.

Although a relatively new narrative, staking has gained significant popularity this year, with the TVL on a platform like Eigen Layer skyrocketing from $1.3 billion at the beginning of the year to $12 billion as of press time.

Whether a DeFi trader opts for staking, staking or both, it is not only about earning some extra coins but also contributing to the security and functionality of these PoS chains.

Wrapping it Up 

The DeFi market is going nowhere; initially, skeptics compared it to a house of cards that would come tumbling down once the hype died. However, time has proven that DeFi is not just about trading but a whole new financial ecosystem – one that runs on automated tech as opposed to biased intermediaries. We will certainly witness more developments soon, but for now, the options listed in this article are some of the ways DeFi investors and traders can diversify or tap into more opportunities.