What portfolio should a beginner build, what should it include, and how does the overall structure look? I prepared a simple framework that you can follow confidently over the next several years. This approach helps you develop a stable investment system and avoid common mistakes.

The first element is the income from your main activity. I have already explained this earlier in the module. The most important thing is having a surplus of money — a portion of your earnings that you can regularly allocate to investments. We invest in cryptocurrency consistently.

On the diagram, I mark a calendar date — for example, the 5th day of each month, or any other day that matches your income schedule from business or work.

On this day, you allocate a comfortable amount for investing. Regular contributions are the key factor. This is why I highlight this step. Long-term investment success depends on regularity.

Let’s say this amount is 1000 dollars. You purchase cryptocurrency with your national currency using Bybit or our exchange service, where you convert cash or non-cash rubles or dollars into crypto credited to your exchange account.

You may use any exchange. I personally use Bybit, but Binance or any other platform supporting your national currency works equally well.

Next, you can deposit funds directly to your wallet if you use the exchange service that sends assets straight to MetaMask. In this case, the step of using a centralized exchange can be skipped unless you plan to purchase assets through the trading terminal.

Then you withdraw funds to your self-custody wallet in any network that is convenient for you: Arbitrum, Optimism, etc. Later, you can always move your assets between networks using bridges, so there is nothing to worry about.

The Ethereum network can be skipped initially if your capital is small. Even with larger capital, it is better to use Ethereum later — once you clearly understand how you operate in DeFi and which instruments you’ll use.

As a result, you have 1000 dollars in your wallet. What next? What portfolio do I recommend?

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Portfolio Structure​

1. 30% in Stablecoins​

The first step is allocating 30% to stablecoins.

• These 30% should remain in stablecoins,
• But not sit idle — they must be placed into:
  • liquidity pools and
  • lending deposits

For example, on Aave or Compound. This is sufficient at the initial stage to ensure your stablecoins work and generate stable yield.

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2. 25% in Ethereum​

Next, we buy Ethereum with 25% of the portfolio.

You can also stake it into a liquid staking token — for example:

• deposit ETH into Lido
• receive stETH
• earn around 3% annually in pure ETH

Later, this staked Ethereum can be used as collateral on lending markets. The principle remains the same: we borrow stablecoins against a strong asset and then allocate them either into liquidity pools or into lending deposits.

Main rule: your yield must exceed the borrowing rate.

You can use borrowed stablecoins for liquidity pools with Ethereum, but you should not do this at the beginning, because this process is far more complex than it appears. I explain the details — including liquidity concentration, volatility risks, and the mechanics of Uniswap V3 — in the dedicated liquidity module. There are many nuances and technical risks, so beginners should avoid this for now.

Focus only on stablecoins borrowed against Ethereum.

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3. 25% in Bitcoin​

The same applies to Bitcoin.

We buy Bitcoin in the Arbitrum, Optimism or Ethereum networks. Even if you withdraw from a centralized exchange, you will often receive wBTC — a wrapped version of Bitcoin that exists on these chains.

Wrapped Bitcoin can also be used as collateral on lending markets. Under this collateral, we borrow stablecoins and then distribute them across different strategies.

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4. 10% in BTC Liquidity Pools​

The next component is allocating 10% to BTC liquidity pools that earn:

• commissions (swap fees) and
• trader-loss yield on decentralized exchanges.

This is a strong position: BTC pools allow you to earn both from swap fees and from the statistical losses of traders.

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5. 10% in ETH Liquidity Pools​

Another 10% is allocated to ETH pools.

This process is repeated monthly:

• Each month you receive income from your main activity
• Allocate funds to investments
• Distribute capital across these positions in fixed proportions

This is the best foundational portfolio for a beginner. It is absolutely suitable for your first steps in DeFi. Later, you can easily modify and restructure it — but first you must understand how the instruments work.

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Why This Structure Works​

Lending protocols are the foundation. But beyond them, DeFi includes a huge range of tools, all covered in the main educational module.

At the initial stage, this portfolio is more than enough. It works well in any market phase:

• You earn yield from stablecoin pools
• You earn yield from lending markets
• You benefit from long-term growth of Ethereum and Bitcoin, which you hold as collateral while gradually increasing their quantity
• You also have BTC and ETH pools that generate income from commissions and trader losses

In this lesson, I will show the full process step by step: from receiving stablecoins in your wallet to allocating ETH and BTC, opening positions, and tracking the entire portfolio. This will give you a clear overview of:

• which assets rise,
• which decline,
• and how the structure performs overall.

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Flexibility of the Portfolio​

Earlier I mentioned target values: ideally, Bitcoin should make up around 70% of a long-term portfolio. In this model it is smaller — and that is normal.

The portfolio is flexible and individual. Beginners usually do not yet understand the market or its cycles. That is why this particular structure is the optimal starting point.

Later you will be able to adjust proportions:

• increase or decrease stablecoin exposure,
• modify the BTC/ETH ratio,
• enhance yield-generating strategies

— everything will adapt as your understanding grows.

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Evolution With Experience​

Next, as you go through the main training program in the Academy, you will naturally gain more exposure, understanding, skills, and practical experience with DeFi instruments.

Over time, you will develop a clear understanding of which DeFi strategies fit your goals, and your portfolio will evolve accordingly. Percentage allocations will change depending on:

• market conditions,
• current trends,
• ecosystem cycles,
• periods with higher token incentives across protocols

Everything is highly individual and flexible, and the opportunities for yield in DeFi are significant.

However, the foundational structure of the portfolio should remain exactly as described earlier. This foundation protects you from mistakes and impulsive decisions.

This is the initial portfolio composition that I recommend to every beginner taking the Web3 bootcamp or the basic modules. The PDF file with the complete scheme will be attached to the lesson.

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Practical Implementation​

Now we move on to building the investment portfolio.

I have pre-funded my wallet. You can withdraw to any wallet you prefer — MetaMask, Rabby, Trust Wallet, or any other option.

This is the amount I am willing to invest monthly into cryptocurrency, and from this amount I will assemble and replenish the portfolio every month.

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Reminder: Staked Ethereum and Deposit Tokens​

Let me remind you of an important point from previous lessons.

Remember how I staked Ethereum using Lido? The balance has increased because staking rewards are accrued by increasing the amount of ETH you hold. I will show the exact number: the amount has grown because staking yield is always paid by adding more ETH, not by issuing a separate token.

You will also notice additional tokens in your wallet — this is normal. These are the tokenized representations of your deposits on the Optimism blockchain within the lending protocol.

• When you deposit USDC or USDT, the protocol issues a token (such as cUSDC or aUSDC)
• These tokens grow in quantity over time
• Later, you burn this token to withdraw your initial deposit along with accumulated interest

This is standard behavior — nothing to worry about. These tokens simply reflect your stablecoins working inside the lending market.

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Step-by-Step: Assembling the Portfolio​

Step 1 — Buy ETH (25%)​

The first step is to go to our DEX aggregator.

Here you always get the best rate for buying any asset on any supported network.

• I choose USDT → ETH
• Buy Ethereum with 25% of my monthly investment

I connect my wallet, press “Review”, and confirm the transaction — this is equivalent to any decentralized exchange swap.

• First transaction: approval
• Second transaction: actual swap into Ethereum on Arbitrum

The Ethereum is now purchased and displayed in my wallet balance.

---

Step 2 — Buy BTC (25%)​

Next, I want to buy Bitcoin with 25% of the portfolio.

I open the swap interface again and type BTC in the search bar. As you can see, it does not appear. Only the wrapped version — wBTC Arbitrum — shows up, which is the Bitcoin already integrated into Aave. We do not need this exact token.

Instead, we manually add the Wrapped Bitcoin contract through the block explorer. I demonstrated this earlier in the “Getting Started” module.

• I go to Arbiscan, search for wBTC
• It shows the official Wrapped Bitcoin contract
• I copy the contract address, return to the swap interface, and paste it

The interface automatically loads the token metadata — here is the Wrapped Bitcoin I need.

• I select the amount — 25 dollars
• Execute the swap

Do not pay attention to misleading preview numbers — the detailed section shows the correct values (for example, a 2-cent fee).

Wrapped Bitcoin is now on my wallet balance: 25 dollars. Ethereum is also there — including the staked ETH from the previous staking module.

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Step 3 — Using Assets as Collateral​

Now I can start using these assets.

I can supply them as collateral. Both Aave and Compound are suitable options — the choice depends on borrowing rates.

In the previous lesson, I showed that the borrowing rate on Optimism was negative at that moment. That is temporary. Borrowing rates tend to normalize across networks over time. For now, we can take advantage of this, but the general long-term workflow usually involves Aave.

So I open Aave and supply Bitcoin.

• It appears as available in my wallet
• I press “Supply” and enable it as collateral

Important tip​

If in a previous lesson I deposited 10 USDT only to earn yield and did not want to use those USDT as collateral, I simply:

• toggle off “Use as collateral”

This means:

• USDT remain purely as a passive deposit earning yield
• Bitcoin will be used as collateral for borrowing

These positions stay independent from each other.

Now I supply Bitcoin:

• First transaction: approval
• Second: actual supply

I receive the corresponding aTokens (for example, aWBTC), which represent my deposit inside Aave.

Their displayed value may appear as zero, but their actual market value fully matches the value of the underlying asset.

Now Bitcoin is supplied as collateral.

I can also supply the Ethereum I purchased with 25 dollars:

• Press “Supply ETH”
• Confirm
• ETH is now also used as collateral

As you can see:

• The “Collateral” indicator is active for both Bitcoin and Ethereum
• It is disabled for my USDT

This means:

• My stablecoin deposit has no relation to the collateralized borrowing position I may open under Bitcoin and Ethereum.

As a deposit asset, Ethereum earns 2% APY, and I can also stake it to receive stETH if I want higher ETH-denominated yield.

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Step 4 — Regular vs Staked ETH as Collateral​

Again, there are two options:

• You can receive an additional 3% yield on staked Ethereum, but:

  • borrowing limit: 70% of the value of your staked ETH
  • liquidation at 79%

• If instead you deposit regular (unstaked) Ethereum:

  • borrowing limit: 82.5%
  • you can borrow 12.5% more compared to using staked ETH

Therefore, you decide for yourself which option is better.

I realized that when working specifically with collateral positions, it is more efficient to hold regular Ethereum:

• I can borrow more
• Liquidation threshold is farther away

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Step 5 — Borrow Stablecoins​

Now let’s take a loan.

• Suppose I borrow 10
• The health factor is explained in detail in the dedicated module

I borrowed 10 at an 8% rate.

Regarding the health factor: the target value I try to maintain is around 2, especially when you invest regularly.

You can always:

• buy more ETH later and increase collateral, raising the health factor
• enable USDT as collateral during a market decline — this will also raise the health factor, since USDT will serve as additional protection

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Step 6 — What to Do With Borrowed Stablecoins​

Now the question is: what should we do with the 10 stablecoins we just borrowed?

There are many options:

• Use them in liquidity pools
• For beginners: only stablecoin pools in different networks

I show a specific tool now.

Remember the liquidity position we opened earlier? Yes, it briefly moved out of range, but that is not a problem — it will return, since today’s deviation is simply an abnormal fluctuation.

You can now add liquidity to the USDC/USDT pair.

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Step 7 — Tracking Stablecoin Yields​

How to track yields?

On average, stablecoin pairs on any network — Arbitrum, Optimism, Polygon — yield around 7% with a wide range.

• A narrower range increases yield
• But also increases risk

You can use these averages as references.

Today we explore the Gamma platform.

• I open Gamma
• Choose the Arbitrum network
• Select the USDC/USDT pair

I sort by rewards and see that this pair — the one I already provided liquidity to — offers an additional 17% APY in Arbitrum tokens.

These are the same incentives I explained previously:

• Arbitrum allocates its tokens to attract liquidity to its network

All I need to do is:

• connect my wallet
• in the Dashboard, rewards will appear after a few days of activity

Here you will see Arbitrum rewards.

You can track this across other networks as well — it depends on where you deploy liquidity. Gamma helps you find pools with incentives.

Important: use only stablecoin pools. There are many others, but volatile pairs are not suitable for beginners.

Even now, the USDC/USDT pool on Arbitrum with a wide range yields around 20% total:

• ~5% from base fees
• ~17% from Arbitrum token rewards

These tokens can be sold or held long term.

This tool should be used together with Uniswap, constantly monitoring incentive programs. Today Arbitrum is attractive; tomorrow it might be Optimism, Mantle, Polygon, Scroll, etc.

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“Playing Against Traders” With GMX​

Now the part where we “play against traders”.

I will not go deep into the mechanics, because it would take too much time. All you need to do is:

• go to the GMX platform (link in the lesson)
• connect your wallet (for example, Rabby)
• switch to the Arbitrum network

At the bottom, you will see the GLP pools:

• BTC-GLP
• ETH-GLP

The yield on BTC-GLP is 13% per year, plus small additional Arbitrum token rewards. The total yield for the last seven days is around 17% APY.

All you need to do is:

• click Buy
• allocate 10% of your portfolio for this instrument
• buy GLP-Bitcoin

These tokens earn:

• from trading fees paid by traders
• from trader losses
• from Bitcoin growth

Of course, GLP grows slower than pure Bitcoin, because half of the pool consists of stablecoins.

Now I repeat the same for the ETH pool:

• click Buy
• choose stablecoins instead of Ethereum
• enter 10 dollars
• confirm

In a few seconds:

• Positions appear on the platform
• For example: 6 GLP-BTC ($10), 6.19 GLP-ETH ($10)

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How Yield Is Accrued​

The yield is:

• Automatically reinvested into the position
• The number of GLP tokens stays the same
• Their price increases over time

Price is affected by:

• Market growth/decline in BTC or ETH
• Aggregated trader losses and fees

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What a Beginner Actually Needs to Do​

In the end, everything a beginner needs to do to create a strong and stable income and to build a resilient portfolio is to use the basic tools.

There will be no hundreds of thousands of percent, no astronomical returns.

But at the initial stage, this is an excellent yield on stablecoins.

We:

• Do not miss the growth of Ethereum and Bitcoin, because they are always present in our portfolio
• Regularly, every month, buy them for a fixed percentage of our investment amount
• Borrow stablecoins and allocate them to liquidity pools
• With tools like Merkly, track yields across stablecoin pools in different networks
• If we find higher yields elsewhere, we move stablecoins via bridges

The income earned from stablecoins can be directed:

• into more Bitcoin
• into more Ethereum
• or reinvested back into stablecoins

We also regularly buy Bitcoin and Ethereum, protecting the portfolio during market drawdowns. These positions are balanced and have excellent long-term prospects.

Over long timeframes, they perform reliably, because traders always lose more than they earn in the long run.

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Tracking the Portfolio With DeBank​

Now, how do we track all this:

• our positions,
• how much we invested,
• what transactions we performed,
• and what positions are open across networks?

We use the DeBank service.

Steps:

1. Click Log in
2. Choose your wallet
3. Click Proceed
4. Click Verify
5. Pass the captcha
6. Sign the message

DeBank opens. There is no danger in connecting your wallet to this service:

• We only connected
• We did not approve token spending
• We did not grant permissions
• We did not allow access to assets

Here we see all positions:

• balances on different networks
• staked Ethereum (from the staking module)
• Aave position
• collateral
• borrowed amount
• Uniswap V3 position
• Compound position

Everything demonstrated in previous lessons appears here.

All our positions will be publicly visible in your DeBank profile. This is how you track your transactions over time.

If you use pools that distribute rewards via Merkly, you will see a Merkly tab — there you will find reward tokens, most likely in Arbitrum, distributed for providing liquidity.

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What’s Next​

In the next and final lesson of this module, I will explain what to do next.

---

These materials are created for educational purposes only and do not constitute financial advice.

In this lesson, I demonstrate the implementation of a very simple strategy in practice. The purpose of this lesson is not for you to just copy it, because over time it will change. Interest rates will change, incentives will disappear. The real purpose is to introduce you to incentives — rewards distributed by protocols to attract and retain users — and to show opportunities through one simple strategy that allows you to earn both from asset growth and from allocating borrowed capital into more profitable instruments.

We begin with the Compound lending market. Recall that in the “Markets” section you can see which instruments are available and on which networks. Today we will use the Optimism network and borrow ETH. Why ETH, and why Optimism? Because if we compare, the borrowing rate across networks is very different from what Optimism currently offers.

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Borrowing ETH on Optimism​

On Optimism, the borrowing rate is negative. This means we are paid to borrow. We take a loan — and receive rewards instead of paying interest.

This happens because Compound distributes COMP token incentives that fully offset the borrowing interest rate. At the moment:

• Borrow rate: ~6%
• COMP rewards: ~66%

Incentives cover the borrowing cost entirely, resulting in a profitable loan.

These incentives are temporary and will eventually end. But right now, this is the most profitable opportunity to take a nearly free loan and even earn income for doing so.

ETH, BTC, and OP can be used as collateral. We will use ETH as collateral and borrow stablecoins against it.

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Getting ETH on Optimism​

To supply ETH as collateral, we must get ETH onto Optimism. There are two ways:

1. Withdraw ETH from a centralized exchange directly to Optimism
2. Use a bridge in the swap aggregator

I connect my wallet, select ETH on Arbitrum, select Optimism, choose the amount (0.075 ETH), and bridge it. The transfer is nearly fee-free apart from gas.

Once the transaction finalizes, the ETH appears on Optimism and is ready to use.

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Supplying ETH to Compound​

Next, we open Compound, go to the Dashboard, and supply ETH as collateral.

One transaction: deposit ETH as collateral.

Now the platform allows borrowing stablecoins against it. Borrowers cannot disappear with the loan because the system enforces overcollateralization. The collateral value must exceed the loan value.

For ETH on Optimism:

• Collateral Factor: 83%
  (You can borrow up to 83% of collateral value)
• Liquidation Factor: 90%
  (Liquidation occurs if debt reaches 90% of collateral value)

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Borrowing Stablecoins​

We borrow 7 USDC.

The interface warns of liquidation conditions. I confirm the transaction.
Nominal debt grows because base interest is ~30%, but this cost is fully covered by COMP incentives.

This is temporary — incentives will decline — but it demonstrates what is possible in DeFi.

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Allocating Borrowed Funds​

Where do we send the borrowed stablecoins?

Since the borrowing rate is negative, any positive deposit yield is profitable.

Options:

• Bridge to Solana and deposit at ~12–13% APY
• Deposit on Aave in Optimism at ~7% APY
  (long-term average ~6%)

In this example, we deposit the borrowed 7 USDC into Aave on Optimism.

This creates a spread between:

• Borrowing cost: effectively 0% or negative
• Deposit yield: ~6–7%

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Resulting Position​

The structure now looks like this:

1. Hold ETH as collateral

   • You benefit fully from ETH price growth
   • You continue holding the asset long-term

2. Borrow stablecoins against ETH

   • Borrowing is currently free or profitable
   • Borrowed capital is deployed into yield-generating instruments

3. Deposit stablecoins at a higher APY

   • Earn ~5–7% APY (or more on other chains)

This is not the most profitable strategy — it is simply a demonstration.

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Expanding the Strategy​

Stablecoins can also be used in:

• Liquidity pools
• Concentrated liquidity positions
• Incentivized pools
• Other lending platforms

ETH–USDC liquidity, for example, can produce much higher yields than lending.

This lesson demonstrates a simple entry-level example — maybe 5% of what DeFi allows.

Advanced strategies include:

• Borrowing ETH against BTC
• Borrowing BTC against ETH
• Multi-asset leveraged staking
• High-yield liquidity routing
• Hedged yield farming
• Volatility farming
• Stablecoin diversification strategies

These will be covered in the PRO modules.

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Why Even Small Yield Matters​

A common misconception:
“6% or 8% APY is too small.”

In DeFi, this is not small because:

• Your main profit comes from ETH appreciation
• Yield is added on top, compounding long-term returns
• Profit can be reinvested into more ETH
• Borrowing weak assets (stablecoins) under strong assets (ETH) increases leverage safely

This is the same principle used in:

• Real estate mortgages
• Dollar borrowing under strong assets
• Institutional long-term strategies

Borrow weak assets; hold strong assets.

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Stablecoin Diversification and Risk Management​

If you fear USDT may depeg:

• Borrow USDT
• Convert to USDC
• Deposit USDC

If USDT collapses to $0.10, you still repay USDT, not dollars.

Borrowing a weak asset and holding a stronger one is a hedge.

You can also split positions 50/50 across stablecoins.

Main rule:

Borrow weak assets
under strong assets.

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Basic vs PRO Modules​

Basic tier covers:

• Lending
• Liquidity pools
• Swaps
• Wallets
• Security

PRO modules include:

• Advanced strategies
• Multichain mechanics
• Liquidity routing
• Hedge positions
• Leverage strategies
• Real yield systems
• Professional-grade DeFi management

What you see in basic lessons is only a small fraction of what is possible.

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What Comes Next​

In the next lesson:

• A complete beginner portfolio
• Asset selection
• Allocation structure
• Long-term balance strategy
• Monthly plan
• How to manage the portfolio in any market phase
• How to start generating yield from day one

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These materials are created for educational purposes only and do not constitute financial advice.

In this lesson, we will get acquainted with lending markets. These platforms are essentially digital banks that allow two groups of users to interact with each other. The first group wants to deposit their funds and earn a stable interest rate. The second group wants to borrow these funds while leaving certain assets as collateral.

At this initial stage, we will use lending markets only from the deposit side — without taking loans, without using collateral. Our goal is simply to deposit stablecoins and earn a stable yield.

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Main lending markets​

Let’s briefly review several lending markets. There is Aave — the number-one platform and overall the safest and most reliable lending market in the ecosystem. Next to it is Compound. There are also other lending markets across various blockchains, offering different assets and interest models. However, for beginners, Aave and Compound are more than enough.

Later, if needed, you can switch to alternative networks where rates may be higher. For example, if you actively use the Solana blockchain, you can use Kamino Finance, where stablecoins can also be deposited for a stable yield.

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How deposits work in practice​

First, we connect our wallet. I choose Browser Wallet, a connection window appears, and now I'm connected. The interface shows my available balance — the amount I can deposit right now.

As an example, let’s deposit 10 USDC at a rate of 6.5% APY.

The first transaction grants approval to the protocol to use my tokens.
The second transaction is the actual deposit.

Think of this as placing money into a digital bank account: you deposit funds into a common liquidity pool, and other users can borrow from that pool — not from you personally.

On Arbitrum:

• Aave has approx. $77M deposited
• Borrowers have taken $65M
• Current deposit rate: 6.54%
• 6-month avg: 8.3%
• 12-month avg: 6.4%

If you deposit $1000, you will have approx. $1063 after one year.

Where does the yield come from?

• Borrowers pay 8.8%
• Depositors receive 6.5%
• The difference is Aave's revenue.

Aave has many advanced features, but at this stage, the only thing you need is: deposit stablecoins → earn yield.

Providing liquidity on Uniswap requires adjustments, monitoring, rebalancing.
Lending markets allow you to earn ~7% APY passively.

---

Checking rates across networks​

Deposit and borrow rates differ by network.

Ethereum:

• Current deposit rate: 6.12%
• 1-year avg: 7.34%

Optimism: similar to Arbitrum.

ETH deposits: 1-year avg is 5.44%, lower than on Arbitrum.

If you have stablecoins you want to hold, the simplest approach:
deposit them into a lending market.

---

Example with Compound​

Compound works identically to Aave:

• Users deposit funds
• Others borrow them
• Depositors earn the supply APY

On the Base network:

• Current yield: 8% (higher than Aave)
• Rates can spike (e.g., 15–19%), but short-lived
• Long-term avg: 6.43%

Yield breakdown:

• 5.58% — base yield (paid in stablecoins)
• 1.26% — COMP token rewards
  Total: 6.85%

Deposit process:

1. Approve protocol to use tokens
2. Confirm deposit

Deposit is shown in the dashboard.
Interest accrues continuously.

Be aware of:

• Smart contract risk
• Stablecoin depeg risk

Both explained in previous modules.

---

Yield structure and examples​

Base rate example: 5.58%
Deposit grows from $10 → $10.56 in one year.

Rewards accumulate over time (COMP or other tokens).

Another example:

• Deposit APY: 12.20%
• Structure:
  • base yield — stablecoins
  • extra rewards — Fluid tokens

Fluid operates only on Ethereum.

Sometimes certain blockchains become temporarily popular.
Example: Kava currently shows 14% pure APY (no incentives).

Why?

• High borrowing activity
• High liquidity demand

Yield depends on:

• Incentives
• Borrow demand
• Network congestion
• Ecosystem trends

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Moving assets between networks​

Method 1 — Bridges​

Use the integrated bridge aggregator:

• Example: Arbitrum → Optimism
• Pay only the blockchain gas fee

Works only between Ethereum-compatible networks.

Method 2 — Centralized exchanges​

Example workflow:

1. Deposit stablecoins on Binance / Bybit
2. Withdraw to a different network

You can deposit in one network and withdraw in another.

Example:

• Deposit in Arbitrum
• Withdraw in Solana

Requires a Solana-compatible wallet, not MetaMask.

Details covered in:

• Crypto Wallets module
• Security Basics module

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What to do after this lesson​

If you have stablecoins:

1. Withdraw to your self-custody wallet
2. Open any lending market
3. Make your first deposit

Interest begins accruing immediately.

Example from the lesson:

• Deposited 10 USDT
• After 10 minutes: already 0.000002 earned

Same on Compound — interest visible in withdrawals.

This is the simplest way to use lending markets:

• Deposit only
• No collateral
• No loans
• Fully passive income

Later, lending markets can be used for:

• Borrowing against collateral
• Using borrowed funds in higher-yield instruments

This will be shown step-by-step in the next lesson.

---

These materials are created for educational purposes only and do not constitute financial advice.

In this lesson, we begin working with the decentralized exchange Uniswap and will open our first liquidity position with stablecoins in practice. I will demonstrate the difference between version-two liquidity and version-three liquidity, and I will add liquidity to a version-three stablecoin pool. Overall, this is an introductory lesson designed to help you understand how liquidity works, how V2 and V3 differ, and why V3 is more efficient. Everything will be shown clearly and in practice.

As a reminder, in this example I am using the MetaMask wallet. You may use any wallet you prefer. On our platform, we have the “Crypto Wallets” module, where you can review all popular wallets and choose the one that suits you.

Right now, I am using MetaMask. Let me connect to Uniswap through MetaMask and show you what I will be doing.

This is the standard interface of a decentralized exchange. There are many functions here, but we will not go into detail — this belongs to the more advanced part of the course, which we cover step-by-step in the main module. In this lesson, I want to focus only on the practical difference between version-two and version-three liquidity.

You can switch between versions here. First, let’s select version two and click “Add Liquidity (V2).” For example, we choose the ETH–USDC trading pair. Recall that version-two liquidity always holds assets in a fifty–fifty ratio based on their dollar value. No matter how much ETH I deposit, the system will always balance it to a 50/50 ratio.

This is why version-two pools are considered inefficient. They are outdated. They can only be interesting if additional token rewards are issued on top — that is, incentive emissions from major projects.

Here is the current statistic for the ETH–USDC V2 pool on Ethereum: the annual fee yield is only about eight percent. This is extremely low, although some users may find it acceptable given that nothing needs to be managed here. There are no ranges, no adjustments — you simply provide liquidity at a 50/50 ratio and receive around eight percent in organic fee income, which is automatically reinvested into the pool.

The same applies to other V2 pools. No matter what amount I deposit, the assets will always be held in a 50/50 proportion — with a slight deviation due to price differences at the time of swap.

These are the old version-two pools. Now let’s see how version-three liquidity works.

Here is another statistic: the USDC–USDT trading pair in version three shows an annual yield of only about three percent. This is also a low level of yield — and now I will show why this happens and what the difference is.

Now let me show why version-three liquidity is more efficient than version-two liquidity. I click “New Position,” select USDC and USDT, and here I can set a range from zero to infinity. This is essentially the same as providing version-two liquidity — just presented in another interface.

Why is this inefficient? Because trading between USDC and USDT takes place around the one-to-one price. Deviations are possible but very small. If I set the range from zero to infinity, I effectively spread my liquidity across the entire price curve. Imagine that my liquidity is distributed over this full spectrum.

What does this mean? Suppose I want to deposit one hundred dollars in USDC and one hundred dollars in USDT. In this case, my assets will be allocated across the entire infinite range. This means that most of my capital will always be idle, because trading occurs only in a very narrow zone around the one-to-one peg. The outer parts of the range will never be used — except in rare cases of strong stablecoin depegs.

If we consider the standard situation, where the price stays near one dollar, using a very wide range — or the range from zero to infinity — results in extremely inefficient capital usage. In the zone where the actual trading volume takes place and where fees are generated, only a tiny fraction of my capital will be active. This is why the yield ends up being around three percent per year — similar to version two.

If instead I use version-three liquidity and set a narrow range around the current price — exactly where trading is happening — the yield increases sharply. Why? Because my capital is concentrated in the active trading zone, where swaps occur and where fees are generated. In the areas where no trading happens, I have no capital — unlike in version two.

The asset ratio in version three constantly changes depending on the position of the current price within the chosen range. Version two always maintains a fifty–fifty ratio. Version three uses a different formula, so the distribution of capital depends on how the range is positioned. If I set a narrow range around the current price, the ratio will be close to 50/50, but this is not a strict rule.

At the same time, there is no “perfect” range for stablecoin pairs. We can only rely on trading-volume statistics and on the ranges chosen by other liquidity providers who have been active for a long time.

For example, here we see a position from a user who contributed liquidity and has kept it active for about one hundred fifty days. He earns nearly nine percent APY on stablecoins simply because his liquidity is concentrated in the active trading zone. This is not the most efficient position and not an ideal range, but it allows passive capital placement and stable fee income.

This range captures almost one hundred percent of all price movements, and we earn fees from it. I set the range to approximately 0.999–1.001, and once again, note that the price of one stablecoin can deviate slightly from its standard value on certain days. Because of this small deviation, my current range looks as if the active price is sitting at the upper boundary. In reality, if we look at a broader timeframe, such a range captures the maximum number of price moves, the highest trading volume, and the most fees, because the asset will stay inside this zone most of the time.

Sometimes the price goes outside the range. During these periods, you stop earning fees. This does happen, but it does not mean you must adjust the range. It simply means you wait. We focus on long-term behavior and identify where the asset spends most of its time — that is where we set our range.

Here is an objective example of a user who has held a position for one hundred fifty days. His range is set like this, and during this period he earned about eight percent APY. Were there days when the price moved outside his range? Yes. Does this mean that we will receive the same yield if we set the same range? No. Yield depends on trading volume and the specific time period.

Trading volumes vary from day to day. Sometimes a particular event causes extremely high trading activity in the pool. If a user was present during such a day, it will significantly boost his annual yield. If we open a position right now, we may capture only an hour or two of activity — tomorrow one full day — and we may simply miss the high-volume days that produce the strongest fees. Therefore, if we open a position right now, our fifteen-day or thirty-day yield will almost certainly be lower than eight percent. Maybe five or six percent. This does not reflect the true annual yield — it only means we did not catch the high-volume periods.

Overall, concentrated liquidity has a huge number of nuances. There are so many subtleties, conditions, and edge cases that it is impossible to fully explain them in one or even ten lessons. That is why there is a full module dedicated to liquidity pools, volatile asset pairs, ranges, and all relevant mechanics.

The purpose of this lesson is simply to show how to provide liquidity and how to set ranges. Also note the fee tiers. For stablecoins, the common fee tier is 0.01 percent. For volatile assets, it is typically 0.05 percent. The 0.3 percent tier is used for more volatile trading pairs, and 1 percent is used for new tokens with low liquidity. This is simply the percentage fee you will receive for each swap inside the trading pair — proportionally to your share of the total pool liquidity.

Now let’s add liquidity to the trading pair. At the moment, I need 1 USDC and 1.23 USDT — the proportion may be non-standard, and this is normal. The first transaction is an approval, allowing Uniswap to use my USDC for creating the position. The same approval is needed for USDT — I confirm it. After that, I can create any positions because I granted unlimited approval. This is safe in this context because Uniswap is one of the most trusted protocols.

I click “Preview,” then “Add,” the third transaction is confirmed, and I receive an NFT representing my liquidity position on the decentralized exchange. The transaction is confirmed; I click “Close,” and the position appears in the positions section.

This section is where fees will gradually accumulate as users swap one asset for another inside the trading pair. Fees will appear here in USDC and USDT, and the proportion of my stablecoins will also change continuously depending on the current exchange rate. Right now, one USDC is worth this amount of USDT. If the rate decreases slightly — and eventually it will drift back toward parity, because stablecoins trade near 1:1 — then the amount of USDC in my position will increase and the amount of USDT will decrease. Fees will also accumulate over time.

This is how concentrated liquidity works on Uniswap. This is just an example. Most decentralized exchanges use exactly two liquidity models. The first is version two — the 50/50 model, where assets are always held in a fifty–fifty ratio by market value. The second is version three — where you set a specific price range to allocate your assets efficiently in the area where most trading volume occurs.

Today’s lesson is intended to help you understand and practice working with concentrated liquidity, and to see the difference between version two and version three. This does not mean you should copy the exact setup I used. Later, there will be a lesson where I show a practical beginner’s portfolio — what anyone can do right now to start earning.

What I demonstrated today is simply an example for gaining experience and practicing interaction with Uniswap. The skill of opening a concentrated liquidity position is very important. For stablecoins — it is essential. For volatile assets — that is a separate topic covered in detail in the module. For stablecoins, it is crucial to learn how to set ranges and understand how they work, because the baseline commission yield is about 7–8% APY over long horizons.

But we will not work only with Uniswap. We will also use other DEXes where additional token rewards are distributed. This means we will receive the base yield from commissions and, on top of that, extra tokens. This is important. And in most cases, you will be working with concentrated liquidity. Sometimes you will also see traditional 50/50 pools — these are simpler: you just deposit stablecoins and receive commissions plus additional tokens. But it is important to understand the fundamentals of version two and version three first.

You can withdraw liquidity using the “Remove liquidity” button — either partially or fully. Keep in mind that as the price changes, the proportions of the assets in the position will also change. You can also increase liquidity in an existing position: once fees accumulate (currently there are none, because almost no swaps have occurred since adding liquidity), you can click “Add liquidity” to deposit additional tokens in the required proportions. These proportions change dynamically based on the exchange rate. These are the two main functions when working with Uniswap.

You can also reinvest — collect fees and add them back into the position to increase the pool size and boost APY through compound growth.

After some time, the first fees from providing liquidity will appear. They can be claimed. Of course, this example uses a very small amount, and adding liquidity with such a small amount is inefficient — the fees will be tiny. Even if the position yields 10% APY over a year, that’s only around two and a half dollars. This is simply a demonstration.

In the next lesson, I will cover lending markets, where you can deposit stablecoins in a single click and earn a stable interest rate. For beginners, this is a better option than providing liquidity to stablecoin pairs at the early stage.

These materials are created for educational purposes only and do not constitute financial advice.

In this lesson, we discuss liquidity providers who earn both from trader losses and from the fees traders pay when opening their positions. As a reminder, on centralized exchanges such as major platforms, traders use leverage, and the exchange itself lends them additional capital. In simple terms, leverage allows a trader to increase the size of their position using borrowed funds.

For example, you may have one thousand dollars and want to use more capital to increase the potential profit of your trade. You can borrow an additional five thousand dollars from the exchange to open a position — to buy Ethereum or Bitcoin and go long. This increases risk, but essentially leverage is simply an expansion of the deposit used in the trade on a centralized platform.

A similar mechanism exists in DeFi, but only on specific decentralized exchanges — not the ones discussed in the previous lesson, which operate with version-2 and version-3 liquidity pools. That is one category of exchanges. There is another category — platforms that allow traders to connect their wallet and start trading Bitcoin, Ethereum, or other assets without going through centralized verification and without submitting personal data. Everything is fully decentralized. One such exchange is GMX.

But the question arises: if a decentralized exchange does not hold its own funds, where does the liquidity for leverage come from? This is where liquidity providers come into play.

What do they do? They hold a basket of two assets — this may be Bitcoin, this may be Ethereum, or it may be stablecoins. In today’s example, we consider a basket composed of stablecoins and Ethereum. Liquidity providers deposit these assets into a trading pool, and traders can borrow from this pool when opening leveraged positions.

We receive the fees that traders pay. The platform charges a fee for opening and closing a position, and a portion of these fees is distributed to liquidity providers. In addition, we earn from trader losses. If traders lose money, a share of these losses is allocated to liquidity providers — proportionally to their share of the liquidity pool.

But naturally, there is also a risk. We lose money when traders earn money. This is a game in which we are on the side of chaos — similar to a casino, where chaos almost always wins. This is the case where we can join the “money-extraction machine” that takes funds from market participants. Over long periods, traders lose money — most of them — and we can position ourselves against them.

What do traders do on GMX? They open long or short positions on the assets they are interested in, and they borrow leverage from liquidity providers. If we supplied liquidity in Bitcoin, traders can take part of that Bitcoin from our pool to open long or short positions. The same applies to Ethereum or stablecoins.

Traders also pay fees for opening and closing positions — part of these fees goes to us as liquidity providers. When traders lose money, we earn because their losses are redistributed among all liquidity providers. When traders earn money, we take a loss, because a successful trader withdraws profits from the liquidity pool. We act as the counterparty — the opposite side of the trade.

Here is a clear statistic showing that over long periods traders lose far more often than they win. Since the liquidity pools on GMX became available, traders have lost around fourteen million dollars. Yes, there were periods where traders earned more than they lost, but the overall graph is trending downward. It will likely continue decreasing — trader losses will keep growing.

All these lost funds — fourteen million dollars — were distributed to liquidity providers, who received around seventy percent of trader losses. And this does not even include fees. Traders pay fees regardless of whether they win or lose — for both opening and closing trades. This is why returns are genuinely strong.

The two main liquidity pools on GMX are Bitcoin and Ethereum. In these pools, we hold a basket of two assets and earn from trader losses, from trading fees, and from asset appreciation. This is an excellent option for allocating capital. It is reasonable to keep a small portion of your portfolio here.

Now let’s review the advantages of BTC+ETH liquidity pools.
First, you earn from trader losses and fees.
Second, you maintain a balanced BTC/ETH position. This position grows with the market.
When the market falls, the drawdown is softened.
Also, this strategy requires no active management.

Now to the disadvantages. The BTC+ETH liquidity position grows more slowly compared to holding pure Bitcoin or pure Ethereum in a cold wallet. Why? Because half of your position is in ETH and half in BTC, not fully in one asset. This smooths drawdowns but reduces upside potential. In reality, this is not a disadvantage — it is simply a structural characteristic of such pools.

This point is very important. People often start comparing liquidity pools with simply holding bitcoin and ethereum. The problem is that no one ever knows where the market will go. You can compare it in the opposite direction as well: liquidity pools perform excellently in a falling market because they smooth out losses thanks to the fact that half of the position consists of stablecoins. On a rising market, they perform less aggressively, but still very well, because half of the pool consists of bitcoin or ethereum, which are volatile assets with strong growth potential.

This makes liquidity pools an excellent position for any long-term investor, considering that we earn not only from market growth, but also from fees and trader losses. This is extremely important. It is obvious that in a strong bull market simply holding bitcoin is more profitable, and in a bear market you can exit into stablecoins and avoid losses. Everyone understands this.

The problem is that no one knows when the market will start falling or when it will start rising. We can only rely on long-term horizons and allocate capital rationally. Therefore, do not listen to people who claim that GMX pools are inefficient or “make less than something else”. It is always easy to invent a benchmark and compare results to something chosen after the fact.

Take bitcoin. If it grew by one hundred percent in a year, someone will say: “If we had invested in this altcoin, we would have earned more.” This is a flawed way of thinking. It is dangerous. We are not trying to play the game of predicting market movements. We cannot know. This is why GMX-style pools should always be part of a beginner’s portfolio.

Now the second risk: the possibility that traders may start earning more than they lose. The chart shows that such moments indeed occurred. In the short term, this can happen. But over the long run, according to the data, traders lose more than they earn with almost ninety-nine percent probability. This is clear from statistics. Therefore, this risk should not cause concern; it should simply be acknowledged. The principal deposit can decrease if a trader makes a large profit — and this will be reflected on the chart. But over long distances, traders still lose more.

The platform also offers pools consisting only of bitcoin or only of ethereum. Earlier we discussed the BTC + stablecoin pool, which provides a balanced position. But there are also liquidity pools that hold only bitcoin or only ethereum. In these pools, we capture the full growth potential of bitcoin and the full growth potential of ethereum during bull markets.

There are no stablecoins in these pools. Therefore, in a falling market the drawdown in dollar terms will be larger because the entire position is volatile. But in a rising market, the returns will be higher because the amount of bitcoin and ethereum increases over time — we earn both trading fees and trader losses.

However, the yield on such pools will be significantly lower than on liquidity pools paired with stablecoins.

Here it is very important to divide decentralized exchanges into two main categories:

Category 1 — Classic DEX​

Uniswap, PancakeSwap, Curve, SushiSwap, etc.
They use version-2 and version-3 liquidity pools.
We earn fees and benefit from asset growth.
Trader profits/losses do NOT affect our deposit.

Category 2 — Futures DEX​

GMX, MUX, Gains Network.
We earn fees from leveraged trading activity.
Trader profits/losses DO affect our deposit.
We earn a lot from trader losses over long horizons.

To summarize:

• Classic DEX: we earn swap fees + asset appreciation.
• Futures DEX: we earn trading fees + trader losses + asset appreciation.
• If traders win, liquidity providers lose. If traders lose, liquidity providers win.

In the next lesson, we will open our first position on a classic DEX — most likely Uniswap — where I will show how to provide liquidity in stablecoin pools, explain the difference between version-2 and version-3 pools, and demonstrate the full process in practice.

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These materials are created for educational purposes only and do not constitute financial advice.

Right now, I am on the 1inch website. If you remember, I have already used it in one of the earlier modules to swap AVAX for USDC when demonstrating how to work with wallets and different networks. But why did I use 1inch back then, while in the previous lesson I used a specific exchange for a swap?

It is important to understand that 1inch is not a decentralized exchange.

1inch is a DEX aggregator.
As I explained earlier, each blockchain has many decentralized exchanges with their own trading pairs, liquidity, volumes, and fee structures. All of them compete for market share.

1inch’s purpose is to find the best possible exchange rate for your swap.

It analyzes all DEXs available on a given network and selects the option with:

• the highest liquidity,
• the lowest fees,
• the smallest slippage,
• and the best overall execution price at that moment.

For example:

• If I want to swap AVAX for USDC, 1inch may route the trade through Sushiswap.
• If I want to swap USDT to USDC, it may choose Trader Joe.

For each swap, 1inch automatically selects the most optimal exchange route and may even split the trade across several DEXs to achieve a better result.

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What I recommend doing right now​

Add 1inch to your browser bookmarks and always use it for any token swap.

If you perform all your swaps through 1inch:

• you will save a significant amount of money over time,
• you will always get the best exchange rate,
• you will pay the lowest possible fees,
• and you will avoid mistakes such as choosing a DEX with low liquidity.

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Why 1inch is one of the most useful tools in DeFi​

• It works across most major blockchains.
• It lets you swap any token for any other token at the best available price.
• It reduces fees and slippage.
• It helps you use your capital as efficiently as possible.

At this moment, 1inch is one of the essential tools you should use regularly to improve your returns and save capital.

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These materials are created for educational purposes only and do not constitute financial advice.

We have finally reached the mechanics of liquidity pools on decentralized exchanges. First, I will explain a bit of background. This was mentioned earlier in the module, but now we will go through it in detail.

Initially, there were centralized exchanges that allowed people to buy and sell cryptocurrency. All trading there is handled through an order book system. On the right, you can see an example: users place buy and sell orders for Bitcoin against USDT. The same applies to any trading pair — ETH/USDT, or any other pair.

When buy and sell orders match at the same price, the centralized exchange executes the trade: the buyer receives the asset, and the seller receives the money. The exchange charges a fee, which it sets at its discretion. This is how all centralized exchanges operate — it is a standard mechanism.

But in DeFi, there was a need for a system that could automatically process swaps based on a predefined formula, without using an order book. Why? Because DeFi works entirely on the blockchain — on smart contracts.

Every action is a separate transaction. Transactions take up space in a block, require time, and cost money (network fees). An order-book system with thousands of open orders on one trading pair is simply impossible to run efficiently on-chain — it is too heavy and expensive.

That is why AMM — Automated Market Maker was created. The AMM performs one key function: it uses a predefined mathematical formula to calculate prices inside liquidity pools and automatically executes swaps between assets.

An AMM is basically a program, an algorithm, a robot. This is why it is often illustrated as a robot — because it mechanically follows the formula without deviation.

It executes trades inside a specific liquidity pool, using only the formula embedded in its smart contract. External market conditions — volatility, price spikes, crashes, or even temporary stablecoin depegs — do not change how the AMM works. The only things that matter are the pool’s internal asset balances and the mathematical rule.

Thus, the AMM enables people to swap one asset for another based on an algorithm that always executes under any conditions — regardless of Bitcoin’s price, Ethereum’s volatility, or whether USDT deviates from $1.

The formula embedded in the AMM is always applied consistently within its trading pair.

In order for any decentralized exchange to allow users to swap one asset for another based on a specific formula, someone first has to deposit these assets into the protocol. This is the role of liquidity providers. Who are they? They are users who supply certain tokens — for example, Bitcoin and USDT — and make it possible for other people to swap between them according to a predefined formula.

In other words, liquidity providers deposit, for example, ETH and USDT. Then the AMM takes these tokens into its smart contract and allows other users to swap ETH for USDT and back, according to a predefined formula. That is all.

Let us look at a very simple, illustrative example. Imagine you run a currency exchange booth in Moscow, exchanging rubles for US dollars. You have a certain amount of capital in dollars and a certain amount in rubles. You must hold two assets to be able to exchange in both directions. That is logical.

Suppose the current exchange rate is 100 rubles per 1 dollar. Any person can come to your exchange, take 500 dollars, and give you a certain amount of rubles at the rate you set. Obviously, to avoid economic shocks and prevent people from simply coming in and taking all your dollars at once, you need a built-in system — a formula that increases the price of the asset as demand for it grows.

So, if someone comes in, takes 500 dollars from your exchange, and gives you rubles, then the dollar rate for the next customer will be higher. You must maintain a 50/50 balance between the assets, in line with their current market value. Therefore, the first customer might buy dollars at 100 rubles, and the next one might buy them at 110 rubles. Again, this example is completely abstract. If the amounts are larger, the percentage change in price will be smaller. This is just to give you an intuitive understanding of how the mechanism works.

If another person comes in and takes another 1,000 dollars, you will have even fewer dollars and more rubles. Demand for dollars increases, and your exchange automatically raises the dollar rate for the next buyer. In this way, you adjust the exchange rate and maintain a 50/50 proportion between the assets — dollars and rubles.

As a result, customers will never be able to completely drain you of all dollars or all rubles, because the formula dynamically adjusts the asset price as demand rises.

This is exactly how the standard AMM formula on decentralized exchanges of the first generation (version 2) works:

x * y = k,

where k is a constant, x is the amount of the first asset, and y is the amount of the second asset. k always remains unchanged.

We go into more detail on the formulas, the math, the swap process, how the price changes when you buy or sell a given asset for a given amount, and all the relevant calculations in the main module.

Because k is a constant, the ratio of tokens in the pool is what determines the asset price. This is exactly what I explained earlier: if the pool holds fewer dollars, the dollar price rises; if there are more dollars than originally relative to the ruble balance, rubles become more expensive. Naturally, the higher the demand for dollars in my exchange, the higher their price will be.

Another important point: the AMM of version 2, with the formula x * y = k, works across the entire price range — over the full range of possible prices.

Imagine that you have one thousand dollars, and you spread this entire amount across the entire price curve — from zero to infinity. This means that even if the price of Ethereum reaches one million dollars, part of your funds will still be allocated in that region, completely unused. And if Ethereum is trading around five thousand dollars, only a very small portion of your capital is active in this price area.

Meanwhile, the huge portion of your capital allocated near one dollar, one cent, half a cent, down to zero — and upward toward infinity — remains fully idle. That capital does not participate in swaps and does not generate fees.

The formula x * y = k allows the liquidity pool to function across this entire infinite price curve, but this leads to the main problem of version 2 AMMs: extremely inefficient capital usage. The majority of the funds are idle most of the time.

The next, more advanced version of AMM — concentrated liquidity — solves precisely this problem. Instead of spreading your entire capital from zero to infinity, you can restrict it to the specific range you are interested in.

For example, you understand that Ethereum will not fall to 10 dollars, and at the same time it will not rise to one million dollars anytime soon. So allocating capital to these extreme zones makes no sense — it will spend 99% of the time inactive. In the region of 1 dollar per ETH, capital would remain inactive 100% of the time.

This is why version 2 is inefficient. In version 3, you can choose a specific range (price interval).

For example:

• from 1000 to 5000 dollars.

As long as the price of Ethereum stays inside this range, you earn swap fees.
If ETH moves outside this interval — you stop earning.

Example:

• If ETH reaches the upper boundary at 5000$, the entire position shifts into stablecoins.
• If ETH falls below 1000$, the entire position shifts into ETH.

This is explained in far more detail in the module — here we are only introducing the concept.

Let’s summarize liquidity pools.

Version 2 (x * y = k)​

Assets are always held in a 50/50 ratio based on market value.

Disadvantage #1 — low yield.
A pool that allocates capital across the entire infinite price spectrum naturally has low returns. Why? Because most of the capital is idle most of the time.

If ETH trades at 5000$, and a user swaps 1 ETH for USDT while I am a liquidity provider in a version 2 pool, I earn almost nothing. At this exact price point, out of my entire 1000-dollar position, only about 1 dollar is actively working. All the rest lies inactive in unreachable areas of the curve.

Conditionally speaking, I earned a one-dollar fee. This is very little, and the rest of the capital — the part allocated around one million dollars and the part allocated around five dollars — is simply idle and does not earn any fees. This is different from concentrated-range liquidity pools, where I specify a concrete price interval and concentrate my capital inside it, significantly increasing fee-earning efficiency.

The second feature of version-two liquidity pools is the fifty–fifty ratio of assets. If you deposit liquidity into a version-two pool, your assets will always be held in a fifty–fifty ratio based on their market value. This is neither good nor bad. This is not a plus or a minus. It is simply a structural property of version-two pools because they are built on the formula x * y = k.

The next point is low impermanent loss. This is important. It really is low. And the reason is simple: capital is distributed across the entire curve from zero to infinity. When the price of ETH rises, we earn fees, and the pool always contains some portion of ETH and some portion of the second asset.

What impermanent loss is — you do not need to think about that now. It is separate terminology, explained later in the module. Next point — very low capital efficiency. I already mentioned this above.

Version-two pools can become interesting only when additional token emissions are added on top. Because version two has very low organic yield and inefficient capital usage, the base fee income in ETH (if you provide liquidity to an ETH pair) will be extremely low. Therefore, these pools may be worthwhile only if they offer high incentives.

As I mentioned in a previous lesson: if a version-two pool has strong incentive rewards, then such a pool may make sense. Otherwise, they are not interesting at all — except perhaps stablecoin pools, and even those only if there are incentives on top. Without additional token emissions, the yield of a standard 50/50 version-two pool is extremely low.

Version 3 — concentrated-range liquidity​

Now let’s move on to version-three concentrated-range liquidity pools. Here the yield is high — and the reason is obvious. We concentrate our deposit within a specific price interval. This increases fee revenue because capital is used efficiently.

The asset ratio is no longer fixed at fifty–fifty. It depends on the range you set and changes dynamically, because version three uses its own formula (more complex than x * y = k).

Impermanent loss is high. Naturally, version three has higher impermanent loss. I will explain this in detail in the module (for users with the appropriate access), but for now it’s not necessary to think about it. A clear advantage is the very high efficiency of capital usage, because we use a specific price range on the curve and earn fees effectively.

There is also a high degree of flexibility. What do I mean by flexibility? You can set any ranges with any tokens — not just stablecoins. Everything discussed today (both version two and version three) applies to all assets supported by the DEX.

This applies not only to stablecoins — it applies to any assets that can be deposited into a liquidity pool. Version-three liquidity pools allow you to position your capital however you want, depending on your goals, financial strategy, and objectives. You can use liquidity very flexibly.

Version two does not allow this. Now let’s look at several cases where using version-two liquidity pools — that is, pools with a fifty–fifty ratio and low efficiency — is truly justified.

The first case is when the trading pair includes a top-tier asset. This may be Ethereum, bitcoin, or other large-cap assets that are difficult to move. Such assets are less volatile, and this point is very important.

The first point is directly connected to the second: version-two pools can be used only if there are additional token rewards distributed by a major project — the so-called incentives. If the yield from these incentives is around twenty percent APY or higher, then such pools can be considered.

You can also use asset-to-asset trading pairs. But again: the key condition is the presence of additional token emissions. If there are no incentives, version-two pools should not be used.

Organic yield in version two is extremely low:

• about 0.5% per year for stablecoins,
• around 8% APY for Ethereum pairs, which is also low.

Asset-to-asset pairs may also be considered, such as:

• ETH — staked ETH (LST; explained in the Staking module),
• Aptos — staked Aptos,
• bitcoin — Ethereum.

In such cases, using version two may be justified — but only if there are additional token emissions. Without them, version-two pools are highly inefficient due to low yields and poor capital efficiency.

Let’s examine a concrete example of yield. This pool uses version two, the x * y = k model, which means a fifty–fifty ratio. Fee yield is 5% APY — very low. This is organic yield: fees paid by traders swapping Ton and stTon.

However, the pool also distributes TON token emissions amounting to 77% APY — which is very strong. In this case, using version two is justified because we earn not only the base fee income but also significant additional TON rewards.

This specific pool makes sense if you already hold TON, plan to hold it long-term, and understand how you manage this asset. And again, we reinforce the fundamental rule for all strategies and instruments: we only work with assets that are already in our portfolio and that we do not plan to sell in the near future.

Again, do not treat this as investment advice. Most likely, if you are watching this lesson later, not on the day it was released, this incentive program may already be over, and the yield may have dropped. This is simply an example of a situation where using version-two liquidity pools is truly justified and reasonable, because there is a large token emission.

If there were no token emissions and the base yield were just five percent APY — with nothing else added — then this would be a highly inefficient and unreasonable use of capital.

It is important to understand that incentive programs eventually end — and they always end. So this is merely an example that will help you later, when working with any DeFi instruments or DEXes, to understand that if there is an interesting version-two trading pair, then for such a pool to make sense, there must be some form of token emissions. Only then does the yield become meaningful.
Five percent APY is very low. Version-three pools can generate significantly higher returns.

Summary of today’s lesson​

Now let’s summarize today’s lesson.

There are AMMs — Automated Market Makers — which are simply robots, or rather smart contracts, that exchange one asset for another according to a predefined formula, regardless of what happens outside. The pool contains two assets, and the AMM executes swaps upon user request.

All trading pairs on decentralized exchanges can be divided into three categories.

First category — stablecoin to stablecoin.
For example, USDC–USDT. This also includes pairs of staked ETH with a stablecoin or with regular ETH. stETH is pegged to ETH and has built-in staking yield, so although it is not literally a stablecoin, its behavior in a pair resembles that of a stablecoin pair.

The same applies to wrapped bitcoin. In DeFi, the native bitcoin cannot be used directly. It must be bridged into another network, such as Ethereum or Arbitrum. Therefore, DeFi uses several versions of wrapped bitcoin, and pairs between those versions also exist.

Second category — asset to stablecoin.
A classic example is ETH–USDC, BTC–USDT, AVAX–USDC, etc. One asset is volatile, the other is stable.

Third category — asset to asset.
For example, BTC–ETH, ETH–ARB, ETH–OP, ETH–SOL, and many others. The list is endless: one volatile asset paired with another volatile asset.

Also remember that there is version-two liquidity and version-three liquidity.

Version-two liquidity should only be used when there is additional token emission, providing strong yields — twenty, thirty percent APY or more. At the same time, the assets must be strong, fundamental — and importantly, they must already be part of your portfolio.

In all other cases, version-three liquidity with ranges is the better choice. In the next lesson, I will explain liquidity pools that work differently: they also earn from trading fees, but in addition, they earn because traders lose money when opening positions.

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These materials are created for educational purposes only and do not constitute financial advice.

We have now reached lending markets, and I am currently on the largest lending platform in the entire crypto ecosystem — AAVE. I will be using it on the Avalanche blockchain. It is available on many networks: Arbitrum, Fantom, Optimism, Ethereum, Polygon, and Avalanche.

Version V2 is also available. It is an older version, but there is nothing wrong with using it — it works perfectly fine. However, V3 is more advanced, so I will demonstrate everything using V3.

The first step to interacting with the platform is connecting your wallet. You already know how this works: click Connect, choose Browser Wallet, and your main wallet will be connected automatically.

On the left side, you can see all available assets that can be supplied as collateral. Now I will show, in detail, how the borrowing process works and why you might want to use it.

I can supply Bitcoin, Ethereum, or other assets as collateral. In the Markets section, you can see all supported assets. Next to each one, you can see the annual yield you earn for supplying it to the platform.

For example, supplying stablecoins yields around three percent per year, supplying wrapped Bitcoin yields around four percent per year, and so on. These yields are small — very small — which is why I would not consider AAVE as a platform for earning money through supply APY alone.

The main purpose of AAVE and other lending markets is the ability to borrow funds against your assets: against Bitcoin, Ethereum, staked Avalanche, or stablecoins. In this example, I will demonstrate how to use your staked token sAVAX as collateral.

If you remember the staking module, I staked regular AVAX and received sAVAX. This token simply sits in my wallet and earns about seven and a half percent annually relative to regular AVAX. So why not use it to build a simple strategy that allows you to increase your total yield on staked AVAX?

What can I do next? I can go to the Dashboard and supply my sAVAX by clicking Supply. It is important to pay attention to the two types of yields displayed in the asset section. The first yield, highlighted in black, is the main annual supply APY. Some assets also show a second, red yield value below it.

For example, for USDT:
— 3.5% — the base annual supply yield;
— 0.25% — additional yield paid in AVAX tokens.

This additional yield is provided by the Avalanche Foundation to encourage users to actively use the ecosystem. Therefore, by interacting with DeFi services (including AAVE), users earn a small additional reward in AVAX.

The same applies to sAVAX. Its base yield from supplying is zero because sAVAX cannot be borrowed. But there is additional yield in AVAX simply for supplying it as collateral. This is important to understand.

The platform also shows Total Borrowed, which is the total amount of assets borrowed by users. For example:

• Total available: 219 million dollars
• Borrowed: 116 million dollars
• Borrow APR: 2.38%

Naturally, the supply APY is always lower than the borrow APR. The difference between these rates is how AAVE generates revenue. I will explain this in a later lesson.

For now, I need to supply my sAVAX to the platform. I will supply the full amount. The first transaction gives approval for AAVE to use my tokens. The second transaction actually supplies sAVAX as collateral. I click Supply sAVAX, and now my tokens are deposited.

The platform also offers to add the aSAVAX token to my wallet — and this is important. This token represents my share of the AAVE liquidity pool. It works similarly to staking MATIC and receiving MaticX. It is not a separate asset but an accounting token showing my share in the pool.

It appears as aAvalanche sAVAX. I receive the same amount in aSAVAX, and when I later withdraw my collateral, these tokens are burned and I receive my sAVAX back.

At this point, I have supplied 0.28 sAVAX.

· It already earns the base 7.5% annual staking yield.
· And I additionally receive 1.62% in AVAX for supplying it to AAVE.

So the total yield on my staked AVAX already exceeds 9% per year, entirely passively. This additional yield, highlighted in red, is accumulated here and can be claimed once a sufficient amount of AVAX has been collected.

Naturally, it only makes sense to claim rewards when the network fee is lower than the reward itself. My balance is only four dollars, so claiming rewards is currently unprofitable. However, with a larger portfolio, these rewards can be collected almost daily and reinvested.

Now an important part. Every asset on AAVE has a specific Loan-to-Value (LTV) ratio, which determines how much you can borrow against your collateral. For example, using sAVAX as collateral, I can borrow regular AVAX — and now I will show how this works.

To do this, I need to enable Efficient Mode. This mode allows borrowing the maximum possible amount of AVAX against sAVAX. I click to activate it and select the AVAX category because I will be borrowing AVAX. After activation, the available borrowing percentage increases relative to the value of my collateral. I enable the mode, click Approve, and now I can borrow up to ninety-two percent of the value of my sAVAX in regular AVAX. I will now explain why this is useful.

Next, I click Borrow, and I can borrow almost as much AVAX as I supplied. But I do not borrow the maximum amount, because even small market movements can cause liquidation. So I borrow 0.23 AVAX instead. I confirm that I understand the risks, click Continue, and take the loan.

The borrow rate is 5.82% per year — which is lower than my staking yield. My sAVAX earns around 7.5%, plus 1.62% additional AVAX rewards for supplying it — a total of about 9% annually, while the loan costs only 5.82%.

This difference in yields is the basis of the strategy. This is the simplest form of leverage. AAVE allows for far more advanced strategies, but here I demonstrate a basic example of increasing staking yield through borrowing.

I borrow AVAX and then stake it again using Benqi Finance. I stake exactly the amount I borrowed — 0.23 AVAX. This gives me new sAVAX — 0.2188 — which I then supply back into AAVE. I click Supply and add more sAVAX.

At this point, I am gradually creating leverage — expanding the size of my collateral with the same asset. My total sAVAX collateral becomes larger than my initial amount.

Now the increased total earns:

• 7.5% base staking yield;
• +1.62% in AVAX rewards;
• +additional yield because of the leveraged collateral.

As a result, the yield on my original position rises to roughly 11% annually, because the collateral size has increased.

This process can be repeated multiple times. That is the idea behind the strategy. Of course, similar logic applies to other assets — you could supply bitcoin, borrow stablecoins, and provide liquidity on a DEX.

This lesson shows AAVE’s functionality: how collateral works, how borrowing works, and how these mechanics form the basis of DeFi strategies.

Full details about advanced AAVE strategies are provided in the module, including an up-to-date list of ready-to-use strategies suitable for different portfolios and yield preferences.

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These materials are created for educational purposes only and do not constitute financial advice.

In this lesson, I will explain how to work with capital in DeFi correctly and why DeFi is needed in the first place.

Remember that DeFi is only a layer on top of the investment approach. The primary goal of DeFi is to increase the amount of your base assets not through speculation, but through the fees paid by other users of the decentralized finance ecosystem.

As we discussed earlier, the market has a so-called “money-extraction machine” that takes funds from most participants. With DeFi, we do not try to fight this machine — we join it by earning fees and increasing the number of assets in our portfolio. This is the core idea.

There is a fundamental difference between:

1. attempting to boost returns using speculative trades — buying something to sell it later and accumulate more bitcoin; and
2. earning through protocol fees, which is a predictable, systematic, long-term strategy.

These are two completely different approaches. The foundation is the investment strategy.

This means a portfolio built from bitcoin, Ethereum, and stablecoins when needed. If someone wants to try their luck with altcoins to outperform bitcoin and Ethereum — that is possible, but it should be a small part of the portfolio.

The investment foundation consists of:

• regular investments;
• monthly purchases of bitcoin and Ethereum using the Dollar-Cost Averaging strategy;
• and only after that, using these assets in DeFi.

The main principle: we outperform the market not by speculating, but by increasing the amount of our base assets.

For example:

• If you had one bitcoin and after a year you have 1.2, that is 20% APY in bitcoin, without trading and without altcoin risk.
• If you had one ETH and after a year you have 1.4, that is 40% APY in pure ETH.

This is a very strong return considering it comes from low-risk base assets. At the same time, you do not need to worry about the dollar value of your portfolio over six or twelve months. You are holding the index of the entire crypto market, using regular Dollar-Cost Averaging, while DeFi adds additional yield on top. Over a two–to–three-year horizon, the results will be extremely strong.

The key DeFi instruments that generate returns are staking, liquid staking, and restaking. If you have not yet reviewed the Staking module, go back to it—it explains in detail what staking is, how liquid staking differs from it, what restaking means, and how these mechanisms help you increase your capital. We will actively use these tools to grow the portfolio over the long term.

The next category is liquidity pools on decentralized exchanges. This is the foundation of DeFi. Liquidity pools come in many types: only stablecoin pools, pools of volatile assets, mixed pools, and many others. All of them make it possible to gradually and systematically grow your capital.

Next are lending markets.

Here you can simply deposit your assets and receive a stable interest rate over time. Lending markets also allow you to borrow assets against your collateral — for example, borrow stablecoins against bitcoin or Ethereum — and direct these borrowed funds to instruments with higher yields than the borrowing rate. This is a simple, non-speculative strategy: you continue holding the index of the crypto market (BTC + ETH) while receiving additional stablecoins to use elsewhere in DeFi.

Another tool is combined liquidity pools, such as TriCrypto and similar products.

You may not be familiar with them yet, or perhaps you’ve only heard the names. These are conservative tools composed of several assets at once. For example, TriCrypto contains:

• one-third bitcoin,
• one-third ether,
• one-third stablecoins.

This is essentially a crypto index that grows with the market, collects fees from traders, and reduces risk through diversification. The same logic applies to other similar instruments: a balance between BTC, ETH, and stablecoins provides moderate growth and stable returns.

These four categories — staking, liquidity pools, lending markets, and combined pools — are more than enough to earn meaningful income in DeFi. There is no need to complicate things or look for “secret ways” to increase yield.

Each category has sub-categories: different decentralized exchanges, different networks, different lending markets.

In this module, we will focus only on the most reliable and time-tested tools that have been used since the early days of the DeFi ecosystem.

One very important note: every decentralized exchange, lending market, or other DeFi protocol always has two types of yields.

1. Organic yield — generated directly by user activity.
   For example, I deposit stablecoins, someone borrows them and pays interest in the same stablecoins — I earn yield in the same asset that I supplied. This is the “pure” yield.
2. Additional incentive rewards — emissions of the platform’s own token.
   For example, I deposit ETH or USDC; I receive organic yield in those same assets and, in addition, may receive rewards in the protocol’s native token. This is important: organic yield is more reliable, while incentive rewards depend on the protocol’s decisions and may change.

This does not happen often, but when it does, you should take advantage of it — while carefully assessing risks and analyzing all potential scenarios to properly allocate your capital and increase your yield through token emissions. This applies not only to lending markets but also to decentralized exchanges.

For example, if we take Uniswap and the ETH–USDC trading pair, I can supply assets to the liquidity pool and earn organic yield in ETH. Users swap ETH for USDC and back, pay fees, and as a liquidity provider I receive my share of these fees — pure profit in the same assets I deposited.

Additionally, in some cases a protocol may distribute extra rewards on top of organic yield — such as UNI tokens, Arbitrum tokens, Optimism tokens, depending on which network the position is created on. These incentive rewards are added to organic income. It is important to understand that the type of reward tokens will vary depending on the network and the platform where the pool operates.

In general, there are two types of yield:

1. organic fees;
2. additional token emissions.

The ideal scenario is when both are present: stable organic income and extra token rewards. But if I must choose only one source, I would usually prefer organic yield in base assets rather than pure token emissions without any ETH-denominated income.

However, everything depends on the specific conditions. Sometimes token emissions are so high that even with zero organic yield, opening a position is still profitable solely due to the additional incentives.

Overall, my approach to working with any DeFi instrument (including Uniswap, lending markets, and liquidity pools) is simple:

• I keep all organic yield in base assets as it is;
• I convert most of the incentive tokens into hard assets, increasing my holdings of bitcoin and ethereum.

This approach allows me to consistently accumulate fundamental assets and improve long-term capital efficiency.

Again, it depends on the person: some may prefer to keep the reward tokens in their portfolio, wait for them to grow, and later convert them into bitcoin or ethereum. However, in practice it is extremely difficult to outperform the long-term growth of bitcoin and ethereum, so each user must decide for themselves. Personally, I recommend selling all received reward tokens, buying more bitcoin and ethereum, and also accumulating more stablecoins — in other words, moving into hard assets.

The tokens shown here are relevant at the current moment; in the future the set of reward tokens may change. In general, the idea is that in the crypto and DeFi ecosystem there always exist pools where large projects distribute token emissions as additional incentives.

Here is a critically important rule: we only use liquidity pools and other tools that involve assets already present in our portfolio. The same applies across all instruments. If our portfolio consists of bitcoin and ethereum, we only work with bitcoin and ethereum. If a liquidity pool distributes rewards in assets we do not want — for example, in random altcoins — there is no reason to enter such a position, even if the nominal yield seems high. This is essential.

Thus, the first rule is: we work only with the assets that are already part of our portfolio. This applies to lending markets, liquidity pools, and all other tools. We do not go beyond our portfolio composition, except in rare cases where we can borrow an altcoin we do not care about, deposit it into a liquidity pool, earn token emissions, then repay the loan and keep the profit. This is a niche tactic, not a foundational approach.

The same logic applies to stablecoins as well. If you choose a strategy based entirely on stablecoins, there are trading pairs and deposit pools where you can supply stablecoins and earn organic yield from fees or from the interest rate paid by borrowers. Additional token emissions may also be distributed. All these rewards can later be converted into a larger amount of stablecoins or used to purchase volatile assets — bitcoin and ethereum.

Let’s define a new term. Token emission — this is what is almost always called incentives. Incentives are additional token rewards for providing liquidity or using lending markets, which are allocated by large projects to attract and retain users in their networks. Projects launch their protocols, or protocols are launched on existing networks — for example, the Arbitrum network or the Optimism network — and these networks need to retain active users within their ecosystems. For this purpose, they distribute incentives — reward tokens such as Arbitrum, Optimism, or any other token depending on the project and its purpose.

These tokens, these incentives, are always used to retain active users. And this is exactly what we will use when deploying our capital: collecting all these tokens, collecting all these incentives, selling them, and buying even more hard assets. The core skills needed to work in DeFi are actually simple. They are: providing liquidity on decentralized exchanges, using lending markets, and using bridges to transfer funds. These three skills form the basic foundation. Of course, not everything is that simple, but if we reduce everything to essentials, these three skills are enough for anyone to earn solid returns in DeFi: liquidity on DEXes, lending markets, and cross-chain bridges.

You already know how to use bridges if you completed the Getting Started module. There, I demonstrated our exchange aggregator. Using it, you can transfer any asset from one major network to another major network. This applies to stablecoins, ethereum, and other altcoins. Everything can be found in our aggregator. Again, all necessary links will be included under the lesson.

Let’s fix the main rule. The primary objective of DeFi is to increase the number of assets in your portfolio through various DeFi instruments. Not to earn through speculation. Not to buy altcoins. If we have one bitcoin, the task is to use DeFi to make it one point two, one point three, or one point four by the end of the year — depending on how conditions allow it, because different market phases bring different yields. This applies both to bitcoin and to ethereum. But overall, the main goal is to increase the number of assets in the portfolio, forming substantial capital over the long term, so that later — and in fact almost immediately — this capital generates stable, systematic income.

And the next important point: while we are increasing the number of assets in the portfolio, we do not worry about the dollar value of the portfolio, because we hold the index of the crypto market — bitcoin and ethereum. For long-term strategies, the dollar price does not matter. There will be temporary drawdowns, fluctuations over a month, six months, or a year. But on a two–three year distance, if you follow the rules described in the previous lesson — the five basic rules, DCA accumulation, regular investments — and combine them with DeFi, then on a two-year distance everything will work out. You will accumulate significant capital over time.

If, however, you worry about the dollar value of your assets, if you are afraid of drawdowns and know you cannot tolerate psychological stress — then work only with stablecoins. This reduces your potential yield. It prevents you from earning on market growth. But at the same time, you remain calm — in dollars, your deposit will always equal the initial amount you invested.

These materials are created for educational purposes only and do not constitute financial advice.

DEX TraderJoe on the Avalanche blockchain. It is time to take a closer look at decentralized exchanges. Right now I am on the TraderJoe exchange — one of the largest decentralized exchanges on the Avalanche blockchain. I will show how the swap process works and then demonstrate what you need to do to earn money by providing liquidity to a trading pair.

Every blockchain has its own top decentralized exchange. There are always many trading pairs, and, as a reminder, everything works only because users choose to provide liquidity to certain pairs and earn fees from swaps. This is exactly why I am able to exchange tokens.

I go to the Trade section. My wallet is already connected, and here I can select USDT — the amount left from the previous lesson — and, for example, swap four USDT for USDC. I receive less than four. Why? Because there is a fee, and this fee goes to the people who provided liquidity to this trading pair. My swap is possible only because the USDT–USDC pool has sufficient liquidity, and at the end of this lesson I will show how to become a liquidity provider for this pair so that I can earn fees as well.

To exchange USDT for USDC, I press the Swap button. A transaction appears in the wallet, I sign it, and wait for confirmation. I have just used a decentralized exchange and swapped four USDT for 3.999 USDC, using decentralized liquidity supplied by other users who earn fees from each transaction. This is why I received less than four — part of the amount was taken as fees.

How to become a liquidity provider​

As I previously explained, you can provide liquidity to a large number of trading pairs — ETH pairs, BTC pairs, stablecoin pairs. Every blockchain has a major decentralized exchange where you can supply liquidity.

Now I will show, using TraderJoe as an example, how liquidity provision works. Every exchange has a Pool section — this is where you can select trading pairs that may be interesting to you for adding liquidity and earning fees.

Here you can see various trading pairs such as AVAX–USDC, USDT–USDC, and many others. The 0.3% value is the swap fee charged on every transaction and distributed among all liquidity providers in the pool.

Here you can also view Liquidity, which is the total value of assets supplied as liquidity to this trading pair. Volume shows the trading volume over the past 24 hours. Fees are the commissions earned by liquidity providers during the last 24 hours. And APR shows the annual yield based on the previous day’s data. For example, if you add liquidity to the AVAX–USDC pair, you can earn around thirteen percent per year, with rewards paid in AVAX and USDC.

Let’s find the pair I used earlier for swapping USDT to USDC. Here it is. I need this exact trading pair, and this is where I can add liquidity. I currently have 4 USDT and 3.999 USDC. I enter 3.5 here and 3.5 here, because liquidity in the standard model is supplied in a fifty–fifty ratio.

There are also other liquidity provision options that can significantly increase your yield, because TraderJoe is a unique exchange where you can supply liquidity within different price ranges and across different price levels to increase your return on one or both assets. This can greatly boost yield, but you must understand how it works and why it is used.

All of these features and all the different liquidity provision models are explained in detail in the module — not only for stablecoins but also for many other assets. Because if you simply provide standard liquidity to a stablecoin pair, as in this example, the yield will be around two to three percent per year, which is very low. There are much higher yields available in other places.

But if you use one of the advanced liquidity provision methods, the yield increases significantly, and you can earn around fifteen percent annually or even more — if you manage your position properly. You can truly earn meaningful returns on stablecoins without interacting with volatile assets at all.

The same applies to other trading pairs — these three tools provide very high yields on pairs such as AVAX or sAVAX (staked AVAX on Benqi). Those pairs can also generate substantial returns.

Therefore, if you are interested in maximizing yield using all available tools and hidden opportunities that few people talk about, you should study the module in full detail.

Adding liquidity (step by step)​

Now, I will add liquidity to the pair. I click Approve — this is the first transaction that allows the exchange to use my tokens. In the standard model, most exchanges require liquidity to be supplied in a fifty–fifty ratio.

Now it shows me the Supply button. Yes, that’s correct — I signed the transaction to supply stablecoins to the pool, it was confirmed, and now my position appears in the Liquidity section. Its total value is seven dollars. I originally supplied eight, but the balance has already shifted slightly. This is exactly what I explained in one of the previous lessons: when one asset is swapped for another, the internal ratio of assets inside the pool changes, and this affects the total amount of tokens attributed to my liquidity position.

From this point on, I will earn two percent in fees from every swap, according to the size of my position relative to the total liquidity in the pool. Currently, the pool holds nine hundred twenty thousand dollars in liquidity, the daily trading volume is eight hundred twenty-eight thousand dollars, and daily fees total one hundred seventy-eight dollars. And with every swap, my position will grow.

When someone performs an exchange, the rewards will show up here — in the liquidity management panel. After a few minutes, even if someone swaps only a small amount, my earned fees will appear here.

All interaction in DeFi happens strictly between users. Some users provide liquidity; others swap assets using that liquidity, paying fees to those who supplied it.

Final notes​

Different blockchains have their own decentralized exchanges, and as I mentioned before, all top exchanges, all liquidity positions, hidden tools, advanced strategies, and techniques are covered in detail in the module. So go ahead and start learning how to earn more using DeFi tools.

In the next lesson, I will show an example of working with lending markets. I will supply my AVAX as collateral and take stablecoins against it, demonstrating the basic principles of lending protocols: what to pay attention to, what risks to consider, and how the borrowing process itself works in decentralized finance.

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These materials are created for educational purposes only and do not constitute financial advice.