Q&A: “Can you really earn 150% interest through DeFi?”

This transcript was generated from the episode audio and may contain minor errors.

[Music]

Over the past six months, I've been on an adventure in decentralized finance, also known as DeFi. Talked about it a couple of times on the podcast. It's been really interesting. I have learned all about staking, which is effectively depositing money in different digital currencies or protocols in exchange for rewards. Now, usually with cryptocurrency or any other investment, your main hope is that the price of what you're investing in goes up over time.

That's the goal. Buy low, sell high. And with staking, you still hope to see that price increase, but the benefit is you're also earning rewards every day in the form of interest. And this interest is often very high. It's frequently 20%, 50%, sometimes 100 or 150% or more.

This is not a joke. It's not a scam. It definitely involves some risk, to be clear. But our listener today wants to know how to get into this. So I'll answer that question.

And there's no product affiliation, by the way, here. I'm just sharing my experience. Of course, you should always do your own research. Welcome to Side Hustle School. My name's Chris Guillebeau.

I'll bring you the detailed question and my answer after this sponsor message. [Music]

Hey, Chris, this is Brian. I've been listening to the show and your blog for a couple of years. I've been learning more about DeFi investing and I've heard you mention it a few times as well, especially the part about staking your deposits to earn returns of 100% or more, sometimes even 150% to 200% or more. What's the best way to get started?

I don't wanna get scammed, but I also don't want to miss out. Thanks, and looking forward to hearing what you have to say about this. [Music]

Yes, fun times. I'm actually writing a book that will cover this topic eventually. It's a long way from coming out, but I'm writing a book about financial adventures, new money stories, as I'm calling it.

And I've really enjoyed kind of delving into this world. What you need to do first and foremost is learn a lot. You need to spend a good amount of time really studying up. Couple resources here. I read a site called The Defiant, like DeFi, TheDefiant.io.

It has lots of detailed free guides about this, lots of more current blog posts coming out every week. Also check out the DeFi subreddit on Reddit. Just go to Reddit and search DeFi, you'll see it. It has something like 100,000 members. Lots of people contributing, lots of information.

Really takes some time. There's a lot to absorb. Not that you need to know everything because that's actually impossible. There's so much, but you need a decent understanding. You need to have an idea of what kind of project you're looking for, and so on.

So it's definitely spend some time. After you feel a bit more comfortable, invest a little bit, not a lot. Invest an amount you could easily lose. And by doing that, you're gonna get the critical hands-on experience. You'll get to see, oh, this is how it actually works.

I put my money here that I can see the returns kind of clock up every day, which is really cool. That's kind of how I got into it. In the long term, you wanna identify how much risk you want to take. Like how much of your portfolio do you want to put into this kind of thing? How far down the rabbit hole do you want to go?

And people have all kinds of answers to that. If you have a substantial retirement portfolio already, maybe you just wanna take a small portion and put it into this. There are a number of people who have, of course, gone much bigger. It's really up to you. I would say the most important thing is to do that research.

These are exciting times. Again, not financial advice here. Be careful out there, but also have fun. It's been really enjoyable for me so far, even with a lot of volatility. Even with the markets kind of going way up or way down, pretty much on a weekly or at least monthly basis, I have been learning a lot.

All right, listeners, we've got a question, comment, and experience. Come to sidehustleschool.com/questions. Let me know what you're working on, how you're trying to figure out how to make extra money without quitting your job, or to create personal freedom, to create your own retirement plan, whatever it is, related to side hustles, of course. We'll continue to feature them throughout the year, along with updates from listeners as they launch their projects. I'll be here every single day, I hope you'll join me.

My name is Chris Guillebeau, this is Side Hustle School. [Music]

- From the Onward Project.