If you have any exposure to cryptocurrency, you’ve probably already seen the potential for radical growth, but you might not know there’s an even more volatile and exciting market out there. Decentralized Finance (DeFi) is barely a $100 billion market globally – tiny by comparison to the trillions in traditional markets – but has seen exponential growth over the last decade, and is expected to continue doing so over the coming years.

DeFi features products with a variety of risk profiles. Some of the most popular are lending platforms, such as Aave or Solend, where depositors typically earn around 10% interest on USDC, a “stablecoin” that is redeemable for exactly one US dollar, or smaller rates on popular coins like BTC (Bitcoin) or ETH (Ethereum). In USDC alone, Aave holds over a billion dollars in deposits. After depositing funds, borrowers can pay a nominal interest rate to borrow tokens like BTC or ETH. Long-term skeptics might

sell the borrowed tokens back for USDC, allowing them a simple way to “short” the asset: if the price goes down later, they buy the asset back at the reduced rate, and repay the loan, pocketing the difference.

Another popular product type is staking, where users, called “liquidity providers” (LPs) deposit assets to a shared pool. Typically, these pools generate fees by offering a service to the host blockchain network itself, such as processing transactions, and that fee is split between LPs. Lido, the largest DeFi protocol in the world in terms of value locked, offers around 3% yields on ETH. Today, Liquid Staking protocols like Jito are growing more common: LPs receive a token that represents their stake in the shared pool. Users who stake SOL (Solana) on Jito receive JitoSol, which not only appreciates at a rate of around 8% relative to SOL, but can also be used for lending, or with other protocols, to earn further yields.

A wider range of riskier products are also available, though access to these is often limited for US persons due to regulatory unknowns, most are simply too new or novel at this time. We’ll cover some of these in a later article.

If you’re interested in trying DeFi, it’s not difficult to get started. The best way is to download a browser extension like Phantom wallet or Metamask, also available as an Android or iOS app. Phantom offers in-app purchase options to load a wallet with funds, such as Moonpay and Coinbase pay, which both take popular credit cards or bank transfer. Some users will also simply transfer coins from an existing account

at a “Centralized Exchange” (CEX), like Coinbase. Just don’t lose your key, and put a backup copy in a safe place. Whoever has your key, has your funds! From there, head to an aggregator like DefiLlama to find popular, trusted protocols in the category that interests you.

Jon Gurary (jonathan@psyoptions.io) is an engineer at PsyFinance (psyfi.io), a community-run ecosystem of financial products based on Solana. The opinions expressed here are solely his own. The content is for information purposes only: not legal, tax, investment, financial, or other advice.