By 2025, the Total Value Locked (TVL) in DeFi has grown to $123.6 billion, representing at least a 41% year-over-year increase, with the top 10 tokens by market cap accounting for a substantial $98.4 billion. This indicates that DeFi is on the rise again: the capitalization of decentralized protocols is growing, new tools are emerging, and major investors are returning to Web3. But along with opportunities come risks—scams, token downturns, and smart contract hacks.
What Is DeFi and How to Earn from It in 2025?
If you want to earn from DeFi in 2025, it is important to understand how these tools work, which strategies are still effective, and which have become outdated. In this article, we will explore:
- What DeFi is in cryptocurrency, explained simply,
- Why it is needed,
- How to actually earn from decentralized protocols,
- How to protect yourself from losses and avoid common mistakes.
Ready? Let’s go!
How to Earn from DeFi in 2025
As infrastructure develops, new products emerge, opening up numerous income opportunities. The key is to understand how these mechanisms work, which strategies are relevant, and what risks they entail.
One of the simplest methods is staking—depositing cryptocurrency in a network to confirm transactions and ensure its security. In return, the user receives rewards in tokens. Ethereum currently offers the most stable yields (around 3–4% annually), while Solana and Avalanche can provide up to 7–8%, and smaller networks up to 15–20%, compensating for higher risk. The main limitation is that funds are locked for an extended period, during which the token price may decline.
For those willing to engage more deeply, liquidity farming is relevant. A user deposits two tokens into a pool on a decentralized exchange (such as Uniswap, PancakeSwap, or Curve) and receives a share of the fees from trades passing through that pool. This is a more profitable but also riskier strategy: with a significant price divergence between tokens, so-called impermanent loss can occur—a temporary, and sometimes irreversible, loss of part of the capital. In stable pairs (e.g., USDC–DAI), you can earn 3–5% annually; in volatile pairs, up to 20–40%, but with substantial fluctuations.
Another working tool is decentralized lending. Protocols like Aave or Compound allow users to earn by issuing loans: you deposit assets, and the protocol automatically lends them to borrowers against collateral. Profit depends on the token and demand but averages 2–6% annually for stablecoins and 1–3% for ETH and wBTC. You can also borrow against your assets to use them in other strategies. However, this introduces liquidation risk: if the collateral price falls below a set threshold, the protocol automatically sells it to repay the debt.
The strategy of long-term investment in DeFi protocol tokens remains popular. Here, analytics matter: you need to understand the project’s business model, revenue generation, roadmap, and tokenomics. Tokens of projects like Lido (LDO), Uniswap (UNI), GMX, or MakerDAO (MKR) showed 2–5x growth in 2024–2025. A separate segment gaining traction in institutional circles includes LSD (Liquid Staking Derivatives) and protocols for tokenizing real-world assets (RWA). However, high volatility and lack of guarantees should be considered: even strong projects can lose value sharply.
Finally, one of the most discussed strategies of 2025 is participating in new protocols at an early stage, known as airdrop farming. You interact with projects that have not yet launched (for example, LayerZero, Berachain, or Starknet, which had launched its testnet at the time of writing), perform actions in their interfaces—conduct swaps, deposit funds, participate in testnets. In the future, the team may reward active users with a token distribution. This model has already brought hundreds or thousands of dollars to those who participated in the early phases of Arbitrum, Optimism, and other projects. There are no upfront investments here, but also no guarantees: not every project does an airdrop, and timelines are unknown in advance.
Another new strategy is restaking. Simply put, this is the ability to reuse already staked assets—for example, through the EigenLayer protocol. You stake ETH in the Ethereum network, receive a wrapped token (e.g., stETH), and use it as collateral in other protocols. Thus, the same asset works in two places simultaneously. Combined yields can reach 15–18% annually, but the technology is new, and risks exist—smart contract instability, potential architectural errors, and lack of precedents.
How to Minimize Risks When Working with DeFi
Earning in DeFi involves not only yields but also high risks. Smart contract failures, price drops, collateral liquidations, fraudulent protocols—all of these can lead to losses. To protect your capital and avoid mistakes, it is important to adhere to several basic principles.
First—Diversification. Never place your entire capital in a single protocol or token. Even proven platforms can be hacked or contain critical code errors. Ideally, distribute assets across several categories: part in staking, part in farming, part in a spot wallet or stablecoins.
Second—Protocol evaluation. Before using a protocol, check who the developers are, whether the code has been audited, how much capital is already locked (TVL), and how actively the platform is used. Protocols with open-source code, audits from CertiK or Trail of Bits, and high liquidity reduce risks. New and little-known platforms often offer inflated yields—but this is usually a sign of unjustified risk.
Third—Limit the amount per contract. Even if a project seems reliable, do not deposit more than you are willing to lose. This is especially true for farming and lending: here, risks of impermanent loss or position liquidation often arise. Keep part of your capital on the side in liquid form to be able to react quickly to changing situations.
Fourth—Thoughtful network selection. DeFi projects operate on different blockchains, each with its own characteristics. For example, Ethereum offers higher reliability but significantly higher fees. In Arbitrum, Optimism, and BNB Chain, fees are lower, but projects are younger and sometimes less tested. Keep this in mind when choosing a platform.
Fifth—Security hygiene. Use separate wallets for different purposes, never store private keys in plain text, and do not connect your wallet to random websites. Regularly check permissions in your wallet and revoke them if necessary. Use hardware wallets for storing significant amounts.
And finally—stay informed. Many risks can be prevented if you learn about a vulnerability or hacker attack in time. Subscribing to specialized channels, chats, and aggregators like DeFiLlama or DefiSafety will help you respond promptly to threats.
Schemes That No Longer Work
DeFi evolves rapidly—what brought stable income in 2021–2022 is often either ineffective or outright unprofitable in 2025. Here are the main strategies and schemes that have lost relevance or become too risky.
Farming tokens with no demand
In the past, many projects launched their own tokens and incentivized users with high yields (100–1000% annually). These tokens had no real value and quickly lost price. In 2025, such schemes are not just useless—they are harmful: you receive a token whose price depreciates faster than you can withdraw profits. Examples: most farms on BNB Chain and Polygon without real revenue or token demand.
Automatic aggregators promising “maximum yield”
It used to be popular to trust auto-farming strategies that supposedly optimized profits. Today, most such services either do not update their strategies or operate on low-liquidity protocols with high risk. Examples: older versions of Yearn, Autofarm, Beefy Finance without transparency and manual control.
Expecting an airdrop for minimal effort
In 2021–2023, it was enough to “click around” the interface once a month to receive an airdrop. Today, competition is higher, and airdrops are often awarded only to the most active users. Moreover, some projects conduct airdrops only via closed lists, without transparent criteria. This makes passive participation ineffective. Example: zkSync—thousands of users did not receive the airdrop despite being active.
Liquidity mining in single-sided pools
Pools where you deposit only one token (e.g., ETH or USDT) were long considered less risky. However, most such schemes no longer generate tangible profits. In some cases, yield is covered only by fees, not by real economics. Additionally, they often mask the lack of demand for the other side of the pair.
Blind faith in yield without analyzing tokenomics
Users still enter projects solely based on APY figures—20–50% annually. But such indicators often do not account for token inflation, fees, volatility, and risks. Without analyzing the model, revenue, and token emission mechanism, this strategy no longer works. The solution is to study tokenomics and focus not on the % yield, but on its sustainability.
Conclusion
DeFi in cryptocurrency is a developing segment with growing capitalization, institutional interest, and new income models. But behind potential profits lie real risks: technical, market-related, and behavioral. To earn rather than lose, it is important to act consciously: analyze protocols, diversify capital, avoid chasing outdated schemes, and be prepared for change.
