DeFi
Interest
In crypto, interest refers to earnings generated by lending or staking your cryptocurrency. Interest rates in DeFi and CeFi platforms are typically expressed as APY or APR.
Last updated: January 5, 2025
What is Crypto Interest?
Interest in cryptocurrency refers to the yield or earnings you receive for lending, staking, or providing liquidity with your digital assets. Unlike traditional savings accounts, crypto interest rates can be significantly higher—but with greater risks.
Ways to Earn Crypto Interest
Centralized Lending (CeFi)
- Deposit crypto on exchange
- Exchange lends it to borrowers
- You earn interest in return
- Examples: Exchange earn programs
Decentralized Lending (DeFi)
- Supply assets to lending protocols
- Smart contracts manage loans
- Higher rates, more control
- Examples: Aave, Compound
Staking
- Lock tokens to secure network
- Earn rewards as new tokens
- Native blockchain mechanism
- Examples: ETH staking, SOL staking
Liquidity Provision
- Provide pairs to DEXs
- Earn trading fees
- Risk of impermanent loss
- Examples: Uniswap, Curve
Current Interest Rates (Approximate)
| Method | Asset | Typical APY |
|---|---|---|
| Staking ETH | ETH | 3-5% |
| Lending USDC | USDC | 2-8% |
| Staking SOL | SOL | 6-8% |
| LP (Stablecoin) | USDC/USDT | 5-15% |
| LP (Volatile) | ETH/USDC | 10-50%+ |
Interest Risks
Platform Risk
- Exchange/protocol failure
- Smart contract bugs
- Hacks and exploits
Market Risk
- Token price depreciation
- Impermanent loss in LPs
- Interest rate changes
Liquidity Risk
- Lock-up periods
- Withdrawal delays
- Slashing penalties (staking)
Interest vs Traditional Finance
| Factor | Crypto | Traditional |
|---|---|---|
| Rates | 2-20%+ | 0.5-5% |
| Insurance | Usually none | FDIC insured |
| Access | 24/7, global | Banking hours |
| Complexity | Higher | Lower |
| Risk | Higher | Lower |
Where to Earn Interest
Centralized Exchanges
DeFi Protocols
- Aave - Multi-chain lending
- Compound - Ethereum lending
- Lido - Liquid staking
Always research platforms thoroughly and understand risks before depositing funds.
Ready to Start Trading?
Now that you understand interest, explore the best exchanges to begin your crypto journey.