In this lesson, we establish the investment foundation for successful investing in the cryptocurrency market. Most likely, what I am going to say today will be completely opposite to what you are used to hearing in mass media, on social networks, and on the internet. But believe me — you don’t even need to believe; I will explain everything today. I will explain why you need to start investing correctly, how to do it, what foundation you must build, and what understanding of the market every person should have if they truly want to earn money here rather than engage in speculation, gambling, or casino-style behavior hoping to get rich. I support a systematic approach, systematic investments, and systematic results.

The first and very important point. I will start with the stock market — with the stock market index. It includes the five hundred largest American companies. This index has been functioning for roughly a century, tracking the growth dynamics of the five hundred largest companies. Initially, there were fewer companies; now there are five hundred. This stock index reflects the entire United States economy and the entire U.S. stock market.

Now the most important thesis — the growth of the S&P 500 index cannot be outperformed by even the most successful private funds over a long distance. Over a short period, they may earn money and outperform the index, but over a long distance, the overwhelming majority fail. It is extremely difficult to outperform the stock market. Extremely difficult. Later I will recommend a book that explains why this happens, what causes it, and how this system works. For now, just remember the thesis: it is very difficult — even for large funds, not just private amateur investors — to outperform the stock market.

Now let’s move to the crypto market. Bitcoin plus Ethereum is the index of the entire crypto market. Here everything works differently. The two main assets that all other assets follow are Bitcoin and Ethereum. They are literally the index of the entire crypto market. Forget the diversification advice you hear everywhere — it does not work in crypto. Diversifying away from Bitcoin and Ethereum increases your risks rather than reducing them.

This is important because the stock market contains five hundred stable companies, while crypto is a completely different domain. In crypto, over its entire history, only two assets can be considered reliable — Bitcoin and Ethereum. Everything else usually does not survive even a single cycle lasting about four years. After that, most projects collapse to the bottom. It may be hard to understand this now because there is a lot of misinformation spread by influencers promoting “promising altcoins.”

But you can always look at historical charts: Bitcoin outperforms all altcoins. Ninety-nine percent, ninety-nine point nine percent of all altcoins that ever existed underperform Bitcoin over a long distance. Yes, there are occasional spikes where certain altcoins grow faster than Bitcoin or Ethereum. But over a long distance, Bitcoin and Ethereum remain the kings of the market.

Not holding Bitcoin and Ethereum in your portfolio is a major mistake. And an even bigger mistake is believing that you can pick altcoins that will outperform Bitcoin and Ethereum over the long term.

There is an entire book written on this topic. It is not about crypto but about the stock market. The idea that someone can outperform the market by picking individual stocks independently is the biggest mistake investors make. And it is not only beginners — even large funds make this mistake, although their income does not depend on outperforming the stock market. They earn from fees and charge a fixed percentage on the entire capital of their investment fund, into which naïve people deposit their money.

Here is another chart. It clearly demonstrates Bitcoin’s dominance compared to all other altcoins, even top ones. This chart does not include “junk” tokens that have dropped ninety-nine percent. Bitcoin is the king of the cryptocurrency market. You may deny it or disagree with it, but this is simply a fact.

Most likely, you are watching this lesson because you still have not achieved stable financial results in crypto. You could not earn money, you lost funds, you bought altcoins that collapsed to the bottom, and you ended up with no profits. Therefore, it makes sense to listen to what I am explaining based on real, objective data. And the message is extremely simple: having Bitcoin and Ethereum in your portfolio is mandatory for anyone participating in the crypto market. No matter how much you resist it, no matter how heavily influencers have shaped your thinking, Bitcoin and Ethereum must be in every portfolio.

So if you still have not achieved financial results, if you lost money buying altcoins and speculating, listen to what I am saying and follow the guidance I will provide in the next lessons.

Now let’s move on to the golden rules of investing.

The first rule — time is the best friend of any investor. This is the rule almost no one follows in the crypto market. That is why most people have no money and no results: they treat the market like a casino, wanting everything quickly, immediately, and in large amounts. The market takes their money and gives it to those who understand that time is the primary ally of an investor, that you must be able to wait and endure. And the market consistently transfers wealth from the impatient to the patient.

This is a simple golden investment rule that has worked for a hundred years in the traditional U.S. stock market.

The next rule is: more actions, less money. People believe that the more actions they take — more small transactions, purchases, reallocations, and rebalancing — the more they will earn. In reality, everything works exactly the opposite: the fewer active actions you take, the more you earn over the long term. Intuitively it may seem wrong, but in practice this is an actual law of investing and a law of any financial market: the fewer actions you take, the more you earn over long timeframes.

The next rule — investing is boring and slow. I do not know who convinced people that investing is exciting, dynamic, and full of constant activity. It may sound appealing to some, but in reality, investing is about repeating boring, monotonous actions, and it takes a long time for results to appear. Everything related to short-term speculation, active buying and selling — that is not investing. You must clearly distinguish between investing and speculation. Investing is boring and long-term.

The next golden rule — an investment strategy must be designed for years ahead. This is something that destroys the majority of beginners in crypto. Their maximum horizon is six months: “I’ll buy, it will grow, I’ll make money.” They have no clear plan, no financial goals, no long-term investment strategy, which should be at least two to three years, preferably even longer.

Another rule — do not buy an asset you are not ready to hold for at least five years. In Warren Buffett’s original version it sounds even tougher — at least ten years. But since we are on the crypto market, the meaning becomes: regardless of which asset you want to buy, always ask yourself — will this asset still be relevant and alive in at least five years, let alone ten?

If you look at history: everything that was “promising” in 2017 — projects, altcoins, “innovative technologies” — all of that is dead. Those assets did not survive even five years; they died within two to three years. The same will happen five years from now with most assets that seem “promising” today.

Therefore, when buying any asset, you must always ask yourself: will this asset remain relevant? Will it even survive? Will it stay competitive in the cryptocurrency market? This is why, returning to my thesis about Bitcoin and Ethereum, these assets must be in everyone’s portfolio. They represent the lowest risk while still offering enormous growth potential.

It is difficult to ignore the promises of dozens or hundreds of “X” returns that people make on the internet, but the actual performance of Bitcoin and Ethereum is extremely strong. Look at their long-term charts — the results significantly outperform any tool in traditional finance, except perhaps a few exceptional companies.

Personally, I am confident that Bitcoin and Ethereum are the assets most likely to remain relevant and alive five years from now. Everything else raises serious doubts. And even more importantly, these doubts are not based on intuition — they are confirmed by statistics. The majority of altcoins, literally ninety-nine percent, disappear. This has been confirmed repeatedly since the very first cycles of the crypto market.

A new cycle arrives — and almost everything that was popular in the previous one is already dead.

That is why everyone should download and read “The Intelligent Investor.” It should not be taken as a literal action guide, but it opens your eyes to how financial markets work, how the stock market index functions, how investment funds operate, the difference between Wall Street and Main Street, and what Wall Street actually earns from — not from asset growth, but from fees.

This book helps to put your mindset in the right place. I mentioned earlier that time is one of the most important factors. And it truly is. Here is a clear example: the Bitcoin chart from 2014 to mid-2016. Over a period of two and a half years, Bitcoin traded both at one thousand dollars and at two hundred dollars.

For most people, this level of volatility is devastating. Many investors bought Bitcoin at one thousand, eight hundred, or five hundred dollars — and then sold at two hundred simply because they could not handle the psychological pressure. This is extremely difficult.

Later Bitcoin recovered and grew, and today its price is obviously much higher than the values shown in that snapshot.

Time matters immensely. If you look not at daily charts, not at one- or two-year ranges, but at five-, six-, or ten-year horizons, the charts look completely different. On daily charts — chaos. On multi-year charts — less volatility. On decade-long charts — the line almost always goes upward.

Economies grow, markets grow, the U.S. stock market historically grows on long distances. The same applies to the crypto market. Most people lose because they look at charts on the scale of a day, week, or month. Sometimes a year or two. And that naturally triggers panic.

They are unable to think long-term, and this is the key to success in investing. In principle, cryptocurrency and the entire decentralized finance ecosystem are built on fundamental investment principles. If you do not know how to invest properly or do not follow the golden rules of investing, then everything you do on top of that will not matter — because the foundation is built incorrectly.

So now we are changing your foundation — the one shaped by so-called “experts” who talk about “promising altcoins” yet are unable to outperform even Bitcoin. Let’s move on.

There will be moments in the market when you do not need to do anything — you just need to sit and wait. Yes, because investing is boring and slow. There are periods when you may do nothing with your assets for several months, half a year, or even a full year: no buying, no selling — nothing. Simply sitting and observing. And this is the truth about investing.

People may tell you about “interesting trades and positions,” but from the perspective of investment fundamentals, you must understand: there will be periods when the only correct action is to do nothing. And you must be prepared for this. It is neither good nor bad — it is simply a fact.

Now let’s talk about the investment portfolio that I recommend for every beginner who does not know what to buy. You have two options. You can continue doing what you have done before. And most likely, if those actions produced stable results, you would not be here. Most likely, you lost money or earned nothing.

So you now have two choices:

1. Continue doing what you did before: buying altcoins, speculating — and again ending up without results.
2. Or listen to what I am saying and follow the recommendations that actually deliver strong results over long distances.

So here is how I see the ideal portfolio for a beginner. If you chose a strategy based only on stablecoins, then your portfolio will consist of one hundred percent stablecoins. But now we are discussing the portfolio for those who want to work with volatile assets and have strong long-term growth potential. Seventy percent I would allocate to Bitcoin.

Again, this is a dynamic value: you may choose to hold more Ethereum or more Bitcoin, but in general, the core structure — the fundamental base — of your portfolio must consist of Bitcoin and Ethereum, at least seventy percent. This means: eighty percent Bitcoin, seventy percent Ethereum, ten percent stablecoins. At least seventy percent of the portfolio should be Bitcoin and Ethereum.

Next: ten percent should be stablecoins, which can be used to buy assets during market dips, maintain target allocation, and also be used across decentralized finance tools. Everything is straightforward.

And ten percent can be allocated to altcoins. Again, this is a fairly high percentage. I personally would allocate around five percent, but I understand that many people find it difficult to accept advice that is completely opposite to what they hear in social media. Therefore, ten percent is acceptable.

Why this portfolio structure?

Because Bitcoin and Ethereum are the index of the entire cryptocurrency market. It is incredibly difficult to outperform Bitcoin and Ethereum. And I have not met anyone — not that I am unsure, I simply have not seen a single person — during all my years in crypto, with the many people I have met through social networks and audience outreach…

I have not met a person who outperformed Bitcoin and Ethereum over the long term. And a long-term period is not two months, not half a year, not a year. It is at least one full market cycle. I have not seen such people.

The stories about “huge gains on altcoins” apply only to short-term spikes. If you stretch the chart over a long distance, yes, altcoins may occasionally outperform Bitcoin and Ethereum in the moment. But in the long run, Bitcoin and Ethereum outperform all of these “super-profitable altcoin traders.”

Therefore Bitcoin and Ethereum are the main index of the crypto market. And just like a stock index consists of major companies, a crypto portfolio must consist of these two assets at least seventy percent.

Do not listen to those who claim that Bitcoin and Ethereum “won’t grow anymore.” Believe me, Bitcoin and Ethereum still have massive upside, simply because crypto is only about two percent of the traditional financial system.

Now regarding altcoins. It is important to understand that the effectiveness of investing in altcoins — or anything other than Bitcoin and Ethereum — should always be compared to market growth. And market growth is represented by Bitcoin and Ethereum. So if I invest ten percent of my portfolio into altcoins, I expect them to outperform Bitcoin in the long run.

Personally — just to be clear — I did not manage to do that. I am not some “super guru.” I did not succeed, neither with AVAX nor with other altcoins I have held. I was not able to outperform Bitcoin and Ethereum over the long term. Ninety-nine point nine percent of market participants cannot outperform them either, so you should not play a game where your initial chance of winning is below ten percent. It is extremely difficult.

This is why only five percent of your capital should be allocated to this kind of “high-risk, high-fantasy” game. If it works — great. Most likely, it will not, but you should have this option available. You can completely remove altcoins from your portfolio and hold only Bitcoin, Ethereum, and stablecoins — and with such a portfolio you can already earn solid long-term returns.

The main mental mistake most people make is thinking: “If I buy more altcoins, I increase risk and therefore increase returns.” In reality, the opposite happens. You increase risk and reduce returns. If you allocate a large portion of your portfolio to altcoins, you do not increase your potential returns — you actually lower them, because over the long term these altcoins still underperform Bitcoin and Ethereum.

The next important point is dollar-cost averaging. Write this down — this is what you need to start doing today, if you are not already doing it.

Your long-term results will depend on this. I mean this seriously. Dollar-cost averaging means buying assets — Bitcoin and Ethereum — for your portfolio every month, on a fixed amount, regardless of their current price. You choose the day of the month based on when you have free funds available for investing. Personally, I have been buying Bitcoin every month since the end of last year, regardless of its price.

This strategy allows you to accumulate assets smoothly, gradually, and with a very favorable average entry price. You may disagree with this idea. You may try to catch the bottom, wait for the drop, buy lower, sell at the top, and then buy lower again. But in doing so, you are playing what Charlie Munger called “the game of fools.” You will lose to the market and to those who simply stay invested longer than you.

These are golden investment principles. They were not invented by me. You do not need to be exceptionally smart to follow simple rules — you just need not to break them. It is very important not to try catching the bottom and not to try selling at the top.

This is a fool’s game. This has been known for decades on the traditional stock market. But in crypto people still think they are the smartest and can outperform the market. You will not. You are one person, sitting with your phone or computer and a Bybit account.

You cannot outperform people with enormous capital, high-end systems, algorithms, and infrastructure that see everything, analyze everything, and know everything.

Do you really think you can beat them? Do not deceive yourself — follow the approach that consistently shows stable long-term results. And this approach is dollar-cost averaging. How do you implement it? Write everything down today, take screenshots — because this is your concrete action plan after this lesson.

How does the strategy work? It is extremely simple. Here are the five steps you must follow. If you follow them consistently, without giving up, without panicking, and without making emotional mistakes — your results after one, two, or three years will be outstanding.

1. Define your monthly investment budget. Look at your main income or business and determine how much you can set aside every month. For example, twenty percent of your income. This becomes your monthly investment budget.
2. Buy Bitcoin and Ethereum every month, regardless of their price. Follow the proportion: Bitcoin should be the majority, Ethereum the minority. At least seventy percent of your portfolio should consist of Bitcoin and Ethereum.
3. Keep part of the funds in stablecoins, maintaining around ten percent of your portfolio in stables. Stablecoins give you the flexibility to buy Bitcoin and Ethereum during sharp market dips, even if you have not yet reached your next monthly deposit.
4. Use your assets in DeFi to grow your capital. DeFi tools help increase not just the dollar value of your portfolio but the number of assets you hold.
5. Do not break these five rules. Do not think you are smarter than the market. Do not try to guess tops or bottoms. Do not chase altcoins thinking you will outperform Bitcoin and Ethereum. Do not act emotionally. If you follow these five principles for one, two, or तीन years — and the longer the period, the better — your results will grow exponentially. There is nothing complicated here. I am not a genius. I simply applied this method for years — buying Bitcoin, using DeFi, acting systematically. These five points are the foundation of the entire strategy and cover ninety-five percent of success. The earlier you start — the more you will earn.

Next point — the regularity of investments. This is one of the most important factors affecting your results. A person who invests every month, consistently and regularly, over a long period — will always outperform someone who makes a one-time deposit and hopes to “grow” it quickly. Even a large one-time investment loses to small but regular contributions over time. This is critically important. Everyone has some amount they can set aside monthly. The key is to do it consistently, regularly, buy strong assets, and then use these assets in DeFi. Regular investing is the most important — I emphasize, the most important — factor that defines your results and success. Without regular investments, you will fall dramatically behind those who invest consistently every month. Therefore, if you currently cannot invest regularly, your first task is to find a way to make it possible: increase your income from your job, business, or main activity so that you have a monthly surplus you can allocate to investments. Without this, achieving results in crypto will be very difficult. And this applies not only to crypto — the same principle works in any type of investing. A one-time purchase of a single stock will not make anyone rich. Regular investing is the key to success.

Now, what you should not do:

1. Do not try to time the bottom or the top of the market. Speculation and attempts to buy low and sell high usually lead to losing all money.
2. Do not buy altcoins hoping to beat the market in the long run. Despite what influencers claim, long-term statistics show that altcoins lose to Bitcoin and Ethereum. If you want to buy altcoins — limit it to five–ten percent of the portfolio and only after you truly understand the market. As a beginner, stick to Bitcoin, Ethereum, and stablecoins.
3. Do not think you are smarter than the market or able to outperform a perfectly honed profit-extraction machine. Wall Street has been operating this way for decades, and the same mechanisms exist in crypto. Your chances of beating it are extremely low. Instead of fighting the market, invest with the market — use Bitcoin and Ethereum as the core long-term index of the crypto ecosystem.
4. Do not ignore the golden principles of investing. Decades of books and investment rules exist for a reason. They work the same in crypto as they do on traditional markets. The underlying principles are identical.

Now, for those who already have a portfolio — usually assembled under influencer influence — here is a simple step-by-step framework:

1. Open your portfolio.
2. Imagine all your assets were instantly converted into stablecoins.
3. Ask yourself: “Would I buy these same assets again in the same proportions?”
4. If the honest answer is “no” — which is the case for most people — then these assets do not belong in your portfolio. Sell them for stablecoins and buy strong, reliable assets instead. This framework is simple but extremely effective for fixing an already assembled portfolio.

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

All liquidity pools operate on a similar principle and allow tokens to be exchanged in a decentralized way within one blockchain through smart contracts. But in order to swap tokens in different directions, liquidity is required. Centralized exchanges usually do not face this issue because they almost always have sufficient liquidity.

But how is this problem solved in decentralized swaps, where there are no traditional order books like on centralized exchanges? Decentralized exchanges work on the basis of smart contracts with liquidity pools. These liquidity pools are filled by users for each token pair. Any user can become a liquidity provider for any available pair.

In return, they receive a percentage of the fees from every transaction executed within the smart contract for that trading pair.

Let’s take the ETH–USDT pair as an example. Trading pairs can consist of any two tokens. Liquidity providers add liquidity to this pair in a fifty-fifty proportion. Let’s denote the ETH portion in the pool as X and the stablecoin portion as Y. The total liquidity of the pool is calculated using the formula:

X × Y = K

The value of K must remain constant, meaning that the total liquidity structure of the pool must stay in balance.

Imagine I have one thousand USDT and want to buy one ETH using this trading pair on Uniswap. I deposit one thousand USDT into the pool and withdraw one ETH. As a result, the pool contains less ETH and more USDT. This increases the price of ETH in this pair because the value of K must remain constant.

This mechanism determines the price of an asset in decentralized trading pairs. The more a purchase transaction disturbs the balance between X and Y, the higher the price becomes. In other words, the larger the transaction size, the stronger the imbalance between X and Y—and the higher the effective purchase price of the asset.

Now let’s discuss liquidity providers. They receive a percentage of every transaction executed in the trading pair to which they supplied liquidity.

Again, using the ETH–USDT pair as an example: imagine the total liquidity in the pool is one million dollars. A user deposits ten thousand dollars into this pool, giving them a one-percent share of the total. In the case of Uniswap, the transaction fee for any trading pair is 0.3%.

Liquidity providers receive a 0.3% fee from every transaction executed in a trading pair — proportional to their share of the liquidity pool. For example, Alex exchanges five thousand dollars for five ETH in that pair. He pays a 0.3% fee, excluding the Ethereum network fee. This equals fifteen dollars.

These fifteen dollars are distributed among all liquidity providers according to their share in the pool. Thus, Peter receives one percent of these fifteen dollars because his share in the pool is one percent.

As mentioned earlier, users provide liquidity in a fifty-fifty ratio. Therefore, if Peter wants to contribute two thousand dollars of liquidity, he must deposit one thousand USDT and one ETH. For simplicity, we assume that one ETH equals one thousand dollars.

Let’s assume the pool contains ten ETH and ten thousand dollars in total. In this case, Peter’s share is ten percent.

Now impermanent loss comes into play. Suppose that after Peter supplied one ETH and one thousand USDT, the price of ETH increased from one thousand to four thousand dollars. Peter’s share remains ten percent, and he can withdraw only this share — plus the fees earned.

Because the price of ETH increased, the X and Y values in the pool changed, while the product K must remain constant. The pool now contains five ETH and twenty thousand dollars.

Peter withdraws his ten percent share and receives half an ETH and two thousand dollars, totaling four thousand dollars.

At first glance, it seems Peter earned a profit. But if he had simply held one ETH and one thousand USDT instead of providing liquidity, his assets would now be worth five thousand dollars, not four thousand. He missed out on one thousand dollars of potential profit. This is impermanent loss, and in this example it equals twenty percent.

It is important to note that in this example we did not include the fees Peter could have earned while providing liquidity.

Suppose it took two years for the price of Ethereum to rise from one thousand dollars to four thousand dollars, as in the previous example. During these two years, Peter earned one thousand five hundred dollars in fees for providing liquidity. In this case, the impermanent loss of one thousand dollars is fully covered by the earned fees of one thousand five hundred dollars, and Peter’s net profit is five hundred dollars.

Thus, the longer liquidity is provided, the less noticeable impermanent loss becomes, because fees accumulate with every swap in the pair, while impermanent loss depends on price fluctuations of the assets. This can be clearly seen on the graph: accumulated fees grow continuously. Moreover, impermanent loss can completely disappear if asset prices return to the level at which you initially added them to the pool.

That is why it is called impermanent — because it can disappear over time.

What conclusion can be drawn from all of this?

Providing liquidity may be unprofitable due to impermanent loss caused by price fluctuations of one or both assets. But if liquidity is provided over a long period — for example, two to three years — the losses from impermanent loss are, in most cases, fully covered by accumulated fees.

The strongest effect of impermanent loss is seen when providing liquidity to a pool with two volatile assets, such as the ETH–BTC pair. These assets are highly volatile, and impermanent loss in such a pair will be much more noticeable than in a pair where one asset is stable.

For example, if you provide liquidity to ETH–USDT, only ETH is exposed to impermanent loss because the second asset’s price remains stable.

You can also provide liquidity to pairs consisting of two stablecoins. In this case, impermanent loss does not occur at all because both assets maintain a constant value. However, yield in such pools is significantly lower. The choice of pair depends on your risk management and investment approach.

It is important to understand that providing liquidity is not a quick way to make money. Over a long period it can be a profitable strategy, but in the short term it is essential to remember the impact of impermanent loss.

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

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In this lesson, we establish a solid investment foundation and examine two primary strategies for working with decentralized finance tools, as well as with the entire cryptocurrency market. There are only two options: working with volatile assets and working with stablecoins. Each option has its own advantages and disadvantages.

Let’s break them down.

The first option is working with volatile assets. You buy assets that can both rise and fall in value. There is significant growth potential, but also associated risks.

The second option is working with stablecoins. You can limit your activity to stablecoins and avoid worrying about market downturns entirely.

Advantages of Working with Stablecoins​

First, the principal amount of the deposit always remains stable and only grows. If you work exclusively with stablecoins, market declines do not affect you. It does not matter whether Bitcoin rises or falls — you operate with stablecoins, and everything remains stable.

Naturally, you can use the profit to buy volatile assets for your portfolio. If you do not want to risk your initial deposit, you can allocate stablecoins into decentralized finance tools to generate yield, and then use the profit — in stablecoins — to buy volatile assets. This way, your principal remains unchanged and stable, while the profit is used to buy assets that can grow or decline in price.

Next, stablecoins offer a high level of flexibility and strategy options. When working with stablecoins, a large number of tools with varying yield levels and complexity becomes available. This provides significant flexibility. It is not just “deposit and wait,” although that approach suits some people. But if desired, there are many additional options.

Also, market declines do not affect us. It does not matter what happens on the market or on Bitcoin’s chart — any drawdowns do not impact stablecoin strategies.

However, it is important to remember that stablecoins themselves carry risks. I explained this in one of the previous lessons: stablecoins may deviate from their target value of one dollar.

This also applies to stablecoins — they carry the risk of losing their peg to one dollar. Another advantage is that stablecoins provide stable and predictable returns. Of course, we cannot calculate an exact annual yield, but we can roughly estimate it depending on the stage of the market, how many new projects are launching, and how many free tokens they are distributing.

We can roughly understand how much we may earn over the year. Moreover, if we reinvest the assets earned through these strategies into volatile assets, the return becomes even higher. For example, we deposit stablecoins, receive free project tokens, sell them, and buy Bitcoin or Ethereum — the overall yield increases.

Disadvantages of Working with Stablecoins​

The first disadvantage is relatively low returns. Even in the best scenario, at the most favorable stage of the market when many new projects launch and distribute rewards, it is possible to earn around thirty percent per year if we simply take profits in stablecoins. If we use the profit to buy volatile assets, the yield will be higher, but it is still significantly lower compared to what can be earned by investing directly in volatile assets.

The second disadvantage is the absence of profit from market growth. By working exclusively with stablecoins, we miss out on the potential appreciation of the entire cryptocurrency market — the growth of Bitcoin, Ethereum, and altcoins that could have been included in our portfolio. We give this up in exchange for stability, predictable returns, and protection from market downturns.

The third disadvantage is the risk of stablecoins losing their one-dollar peg, as well as the risk of high inflation of the dollar or even its complete collapse. These risks must also be taken into account. I don’t believe the dollar will face an actual collapse anytime soon, but it is important to understand that this risk exists theoretically.

What a Stablecoin Strategy Looks Like​

Let’s say I have one hundred thousand. I allocate these stablecoins into different strategies and receive profit. After that, I have three options.

First, I can withdraw all profit and use it for real-life expenses — converting it to fiat and sending it to a bank card or bank account, essentially receiving passive income from my investments.

The second option is to use the profit to purchase volatile assets, building a portfolio of Bitcoin, Ethereum, and possibly certain altcoins if needed. In this case, the principal amount in stablecoins always remains unchanged. There are many flexible options here. For example, I can earn twenty percent per year and reinvest half of the profit back into stablecoins to increase my principal, while using the other half to buy volatile assets.

Use the second half of the profit to buy volatile assets that will grow together with the market. Thus, strategies involving stablecoins offer significant flexibility. Everything depends on what is comfortable and convenient for you, because each person’s goals and preferences are different.

The third point is reinvesting. You can reinvest all the profit to increase your principal. In this case, compound interest begins to work, and you earn more and more while remaining fully in stablecoins.

Advantages of Working with Volatile Assets​

The biggest advantage is the enormous potential profit from market growth. Even simply holding Bitcoin and Ethereum provides real upside, because the cryptocurrency industry is still in an early stage of development. Compared to the traditional financial system and the stock market, the total market capitalization is still small — therefore, the growth potential is enormous when purchasing volatile assets.

The next advantage is protection from inflation and regulation (in parentheses: Bitcoin). Bitcoin protects me from inflation and potential regulatory restrictions in the financial system. With Bitcoin, I am protected from inflation, from the decline of the dollar, and from almost any economic instability. Personally, I do not see any asset stronger than Bitcoin right now, and I do not think such an asset will appear in the near future. Again, this is my opinion. You must arrive at this conclusion independently — not accept it as a fact. You must study Bitcoin carefully.

Next — a wide range of DeFi strategies. By working with volatile assets, we have access to a broad selection of tools and strategies, from low-risk, low-yield strategies to the highest-yield strategies with the highest risk.

The fourth advantage is the ability to preserve and grow capital over the long term. With dollars you can also grow your capital and earn money. Returns there are indeed high compared to the traditional financial system, where yields on dollar deposits are around two to five percent, as in the case of U.S. treasury bonds. In decentralized finance, stablecoin strategies can yield around fifteen to twenty percent with moderate risks — this is already significant. However, compared to a portfolio built from volatile assets, the returns from a stablecoin-only portfolio are still relatively low.

Bitcoin truly provides a real opportunity to preserve and multiply your capital over a long distance, constantly growing it, expanding it, and extracting passive steady income from it.

Disadvantages of Working with Volatile Assets​

The principal is not static and can change depending on market conditions. This is what scares most people. Most beginners in crypto are afraid of drawdowns, afraid of market declines, afraid that their portfolio will become cheaper than the price at which they originally bought their assets.

This is a fact. Markets can indeed experience long declines and deep prolonged drawdowns. As I wrote here, this is what pushes most people away. This is why they do not make money. They panic, they sell, they cannot look long-term, and they cannot plan their investments several years ahead. Because of this, they not only fail to earn — they also lose money, since they sell all their assets in panic.

Therefore, the two main disadvantages are that the principal is not static and that deep long drawdowns can occur. In reality, if you can handle these two disadvantages, the advantages will outweigh everything listed here, because the main advantage is the potentially enormous growth of your portfolio in dollar terms over a long distance.

The next disadvantage is that it requires patience and psychological resilience. This applies to all long-term investments. If you do not know how to wait, if you lack patience, and if your psychology is not developed, you will act emotionally and sell your assets at a loss because of some news that “Bitcoin will be banned.” This is important. For some people this is a major disadvantage, for others it is insignificant, because they are psychologically stable.

The fourth disadvantage — some assets can completely lose their value. This refers to various altcoins. Later, in the following lessons, I will show a chart of Bitcoin relative to altcoins.

Overall, if you buy Bitcoin and Ethereum, you are already in crypto. Bitcoin and Ethereum are the lowest-risk assets. If something happens to them — if something bad happens to Bitcoin and Ethereum — then all other assets on the market will be worth zero. Therefore, do not worry: if you are betting on crypto, buying Bitcoin and Ethereum is the lowest possible risk. Probably only stablecoins have a lower risk level than Bitcoin and Ethereum.

Warren Buffett Principle​

The next important point is a quote from Warren Buffett, which helps understand how markets work. The market (in his case he refers to the stock market, but this applies to any financial market) is a mechanism for transferring money from the impatient to the patient.

This is an extremely important and simple principle. Your entire investment strategy should be built on it. If you cannot wait, if you are impatient, if you panic, if you want everything quickly, immediately, and in large amounts — you will simply give your money to those who know how to be patient, who know how to wait, who are not affected by panic-driven behavior or emotional decisions.

It is a simple concept. All of the greatest investors in the United States and in the world follow it: patience and time in the market allow you to earn a very large amount of money. If you cannot wait and cannot stay patient, you will simply give your money to other, more patient market participants.

This happens constantly. It happens in the stock market. It happens in the cryptocurrency market. Money always flows from those who cannot wait, who cannot stay patient, who have no long-term investment strategy — to those who do have these qualities and who know how to look far ahead.

Time in the Market​

Overall, time in the market will allow you to earn good money on its own. If you simply buy Bitcoin and Ethereum using the strategy I will explain later, you will be fine. Your capital will grow over time, you will have more and more money. But with DeFi this process can be accelerated — and not by speculation, not by buying altcoins with high potential and then moving everything into dollars or Bitcoin and Ethereum.

No. In DeFi, we earn because the number of our base assets grows. I will cover this in detail in the next lesson. To achieve solid financial results in crypto, you need a strong foundational base. If we break it down into four blocks, it looks as follows.

First — a clear financial goal.

Second — selecting a strategy for working with assets. At this stage, we choose the approach we will follow. If you are afraid of market declines, if you know you cannot psychologically withstand a drawdown — a long one, lasting a year, or a year and a half, or two years, during which your portfolio may remain in the negative — then it is obvious that you should choose stablecoin-based strategies.

In this case, you lose the potential for large asset growth, but your psychological state remains calm and stable. Alternatively, you can choose to work with volatile assets and earn significant money over a long distance and in the long run — but this also requires skills, knowledge, understanding, and psychological resilience for everything to be effective.

Next comes the selection of DeFi instruments that you will work with over a long distance, using either stablecoins or a portfolio of your volatile assets. And only after that — generating profit. You cannot jump from the first stage straight to the fourth, skipping the two in the middle. You cannot move to the profit stage without doing any of the prior work. Time is needed, and time is always the most important and fundamental factor in cryptocurrency.

In finance and in life, nothing happens quickly, instantly, easily, or in large amounts. This is important to remember.

Setting a Financial Goal​

How do you set a financial goal? It must be clearly defined, literally down to the numbers. For example (this is just an example — you should orient yourself according to your income level, your capabilities, and how much you can regularly invest in cryptocurrency): invest twenty thousand USDT into crypto over a six-month period. Again, you choose the timeframe that fits you. If you want to enter the market more smoothly, you should increase the timeframe — for example, six or twelve months. Some people want to enter crypto quickly and complete this in three months.

Look at how much money you can allocate monthly for investments from your primary income. In this example, twenty thousand USDT over six months means the following: “I must set aside this specific amount each month so that after six months I will have this total amount in crypto, which I will then place into DeFi instruments to earn stable yield of fifteen percent annually. After that, I will use this yield to cover my basic expenses.”

This is also a valid financial goal, because cryptocurrency can be used in many different ways depending on a person’s needs. Not everyone needs to buy volatile assets. Not everyone needs extremely high returns. Not everyone needs complex strategies. Some people simply want to earn fifteen percent annually on their capital and gradually grow the deposit through regular investments.

Another example of a financial goal is more specific and focused on building capital. In this case, the goal is to earn two hundred thousand dollars through cryptocurrency over a two-year period, then fully move into stablecoins and earn fifteen percent annually, covering basic expenses through passive income. This is a bigger goal, and it requires larger investments, more time, more money, and more regularity — contributing funds monthly, buying volatile assets, and applying strategies for working with these assets over time.

Again, it is difficult to set a precise number here, because the market is unpredictable, and a prolonged decline may easily last a year and a half — exactly the period you might have set for reaching your goal. Therefore, time is not the most accurate metric, because no one can predict how the market will behave.

A more accurate metric and more concrete action plan is your regular investments — the contributions you make into cryptocurrency. This is the most important factor. I will explain this in the following lessons. Therefore, after this lesson, take time to fully outline your financial capabilities. How much money do I earn — from business, from work, from my primary activity? How much can I set aside for investments each month on a regular basis — not once, but every month consistently? How much can I realistically allocate?

Based on this capability, think about what capital you want to build in cryptocurrency — whether in stablecoins or volatile assets. It does not matter. Set a clear financial goal, write it down, determine a precise timeframe and a precise annual percentage target. You must understand that there will be no sky-high yields on stablecoins. Around twenty percent per year is a reasonable, solid rate you can earn in decentralized finance with moderate risk. Everything above that comes with increased risks — obviously, because the higher the return, the higher the risk.

Why Most People Fail in DeFi​

The most important thing — you cannot skip the first three stages. Most people want to jump straight to: “I want to earn a lot of money, I want massive yields on my assets.” Meanwhile, they have no foundation, no strategy, no understanding, no financial goal. They do not even know whether they are working with stablecoins or volatile assets. They know nothing — they just want a lot of money. That is why it does not work for them.

It is extremely important to build a foundation for future investments, for working in cryptocurrency, and for working with the decentralized finance ecosystem. Therefore, the results you will achieve in decentralized finance depend on three critical elements.

First — financial goals. There may be several. There may be one major goal and a few intermediate ones. Everything depends on your personal needs. I cannot look inside your mind and see what you want, because everyone has different goals and interests. But financial goals must exist.

Second — your investment portfolio. What assets do you work with? What assets do you hold? What is their percentage allocation relative to each other? Perhaps you work only with stablecoins, and volatile assets do not interest you.

Third — the presence of a long-term strategy over a long distance. A minimum of two to three years — this is the timeframe in which, if you do not give up and if you make regular investments, you simply cannot lose. You cannot fail to earn money. This has been proven by me personally and by a large number of other people.

A timeframe of two to three years is the key timeframe. If you remain in the market during this period, make regular investments, and avoid mistakes, this is the period where rapid growth begins. You do not lose money — you earn money. Everything works well for you. Most people cannot withstand such a long time horizon. They want “a lot and quickly,” which is why nothing works for them.

This is exactly why, for most people, nothing works at all — because they have no foundation. Their only “foundation” is the thought: “I want to earn a lot, I want a lot of money.” A person does not understand why, what their financial goals are, how much they want to earn, or what capital they are aiming for. Everything is vague and absolutely abstract in their mind. And because the foundation is built incorrectly, nothing built on top of it will work.

A person will make foolish mistakes, lose money, make wrong decisions driven by emotions and panic, and eventually leave the market forever, completely forgetting about it.

Your Action Plan After This Lesson​

Take a sheet of paper, a notebook, or notes on your phone or computer, and clearly determine for yourself whether you will work with volatile assets or with stablecoins. Later, you can modify your strategy as you gain experience, but at the initial stage you must clearly decide whether you are psychologically ready to endure drawdowns or not. “I am afraid, I will panic, I will sell my assets at a loss” — then stablecoins are the better option. Choose your strategy of working in cryptocurrency clearly.

When you gain more information, skills, experience, and a broader view of the crypto market, you can modify your strategy freely. But at the beginning, you must select one of these two options.

Of course, there is a third option — working with both stablecoins and strong assets. This is the optimal strategy, and the one I personally use, because it provides excellent results for me.

The second action that absolutely everyone must take after this lesson is to write down on paper your financial goals — what you want to achieve and within what timeframe. It may be two or three years. It may be twelve months. It may be six months. Set intermediate goals, clearly describing the amount you want to contribute. And the goal does not even have to be about earning money. For example: to contribute twenty thousand dollars into cryptocurrency over twelve months. This is already a good financial goal.

The next step will be allocating this contributed capital into tools that generate fifteen percent annual yield. Be sure to write down financial goals that are relevant specifically to you — not someone else’s goals, not “make 500x” or “become a billionaire from 100 dollars.” Your own financial goals that correspond to your personal needs.

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

How much can you earn in decentralized finance? This is the most common question, and there is no definitive answer. Returns in decentralized finance depend on many factors: the assets in your portfolio, the instruments you choose to work with, the strategies you build using these instruments, the risks you are willing to take, and even the way you calculate your returns. There are different methods of calculating yield, and this is an important point that I will address later in this lesson.

Let’s start with the first factor — the assets in your portfolio. They have a significant impact on your earnings. For example, if your portfolio includes Ethereum, Bitcoin, and stablecoins, almost all tools in the decentralized finance ecosystem become available to you. You can use decentralized exchanges, lending markets, and many other passive-income instruments.

However, if your portfolio consists of different assets, your choice of instruments may be more limited. Naturally, the returns may also vary, because the set of assets affects trading volume, fee levels on decentralized exchanges, and the overall performance of your portfolio.

The strategies you choose also naturally affect the returns you receive in decentralized finance. Strategies vary widely: some involve using many different assets, some are focused solely on farming stablecoins, and others aim to increase the amount of assets in your portfolio rather than the dollar value of your holdings. There are many types of strategies, and your choice directly affects the yield you will receive.

Your returns are also influenced by the instruments you select and the risks you are willing to take with your investment assets. Different instruments come with different risk levels, different yield potential, and different assets that can be used within them. Everything is highly individual, and it is impossible to claim that there is a fixed return for a specific asset such as Bitcoin or stablecoins. The spectrum of available tools is too broad, and each person selects instruments and strategies differently.

Therefore, there is no single universal number that defines returns in decentralized finance.

And the most important point is how you calculate your returns, because users measure returns differently. Some people have a portfolio composed of stablecoins and want to generate passive income, withdrawing profits monthly in stablecoins. Others hold Bitcoin and Ethereum and want to increase the amount of these assets, without focusing on the dollar value of their portfolio.

Thus, different users have different goals and different methods of calculating yield.

For example, you may have started with one Bitcoin when it was worth fifteen thousand dollars. One year has passed, and during this time you used decentralized finance tools to grow your portfolio: from one Bitcoin you increased your position to one and a half Bitcoins. Technically, you are up fifty percent because the amount of Bitcoin you hold has increased. However, during this year, the price of Bitcoin dropped to five thousand dollars. As a result, in dollar terms you are in the negative, while in Bitcoin terms you are in the positive.

For some people, this is a good result; for others, it is negative, because they lost money in dollars. Everything is highly individual: whether you calculate returns in tokens or in dollars, whether you withdraw profits monthly or yearly, or choose not to withdraw at all and reinvest. This is why decentralized finance yields can vary significantly.

Market cycles also affect your returns. You might enter decentralized finance at the beginning of a bull market, buy assets — Bitcoin and altcoins — and the market begins to rise. Your portfolio in dollars increases significantly over six months, and you might think this is due to the tools you used. Yes, these tools help increase the amount of assets, but the primary reason for the growth is that the market itself went up. If the market had not grown, your returns would have been much lower.

The same applies to a bear market. If you enter decentralized finance during a downturn, your assets will decrease in value, your positions will drop, and the issue is not with the tools — the market simply fell, and Bitcoin’s price declined. However, even in this case, decentralized finance still allows you to increase the number of assets in your portfolio — to accumulate more Bitcoin, altcoins, and stablecoins. Later, when the next bull cycle begins, you can lock in these gains and earn a solid profit.

The most effective strategy in decentralized finance is combining portfolio investing with decentralized finance tools. If you simply held a strong investment portfolio that grows with the market — Bitcoin, Ethereum, a few altcoins, and some stablecoins — you would earn only from market appreciation.

But if you also use tools within the decentralized finance ecosystem, you earn not only from the market’s growth but also from the ecosystem itself. Your portfolio grows not only in dollar value — the amount of assets inside your portfolio also increases, and this is extremely important.

And this strategy can be used both during a bull market and during a bear market. In fact, during a bear market it becomes even more relevant, because while everything is falling and assets are extremely cheap, this is the best time to accumulate strong fundamental assets in your portfolio.

Therefore, to summarize and answer the question of how much you can earn in decentralized finance — I cannot name an exact number, neither in dollars nor in tokens. However, decentralized finance allows you to build passive income or use various tools to increase the capital in your investment portfolio.

But the actual yield and profit depend entirely on the five factors I described earlier in this lesson.

In the next lesson, I will explain how decentralized exchanges work, how much you can earn on them, and how liquidity provision functions.

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

Next are lending markets. These are also a fundamental component of the entire decentralized finance (DeFi) ecosystem. What are lending markets? These are credit markets where you can either borrow money or lend money to someone else.

Let’s start with an example from the traditional financial system. If you want to take out a loan of one hundred thousand dollars from a bank, what do you need to do? You must go to the bank, sign an agreement, and leave your property as collateral. If you are unable to repay the loan, the bank can seize your property. The property acts as collateral — it could be real estate, a car, or other valuable items. Collateral must always be provided in order to receive a loan, and if the loan is not repaid, the bank takes the collateral and sells it to cover the unpaid debt.

And all of this, again, is formalized through a contract, and the borrower interacts directly with the bank — a centralized institution.

How Lending Works in DeFi​

How does lending work in DeFi? Everything happens between two users — the borrower and the lender — and is enforced by smart contracts. In this case, I can borrow, for example, fifty dollars at a certain interest rate. Therefore, I must leave collateral in some cryptocurrency. This could be Ethereum or Bitcoin, and the collateral must be worth more than the amount I am borrowing. This ensures that the lender is protected and that I cannot simply disappear with the borrowed funds.

So yes, I could theoretically borrow fifty dollars and never repay it. But since I have deposited collateral worth more than the loan amount, the lender will always get their money back.

Likewise, I can act not only as a borrower but also as a lender. I can deposit my USDT stablecoins into a smart contract, and other people can borrow these funds while paying me interest. This interest accrues continuously.

And I can withdraw this money at any moment. This is the foundation on which the entire ecosystem begins. A large number of strategies use lending markets as a starting point, where you can deposit your Bitcoin as collateral and borrow stablecoins against it.

And I will immediately answer the most common question — why leave something as collateral if I can simply sell it and get dollars right away without borrowing?

Why Borrow Instead of Selling Your Assets?​

This is very important. If you have a strong asset in your portfolio — for example, Bitcoin — and you do not want to sell it because you believe it will be worth more in the future, but you currently need free capital — you need stablecoins. You deposit Bitcoin as collateral, borrow, for example, one thousand dollars against it, use that one thousand dollars in various strategies, and earn profit.

Then, when you need to retrieve your Bitcoin, you return the one thousand dollars — paying an interest rate of, for example, five percent per year — and take your Bitcoin back when it is already worth more. You do not sell your Bitcoin, you keep your asset, and at the same time you receive free capital to work with other instruments. This is crucial to understand.

If you simply sold Bitcoin at a low price, later you would have to buy it back at a higher price and lose more money than if you had left it as collateral and borrowed stablecoins against it.

Example of Borrowing and Earning​

Let’s consider an example where I leave twenty-five thousand dollars as collateral — that is two thousand five hundred dollars — and borrow one thousand dollars.

After this, I can use the borrowed funds anywhere. I can transfer them to another blockchain, send them to another wallet, and freely do anything I want — deposit them into stablecoin staking or earn yield in other instruments. After I finish working with the borrowed funds and receive some profit, I can repay the loan. For example, if over six months I turned one thousand dollars into one thousand three hundred dollars.

I repay one thousand fifty dollars, including interest, and the remaining two hundred fifty dollars is my profit. At the same time, my Bitcoin remains unchanged. This means I can withdraw my full collateral of twenty-five thousand dollars, plus the two hundred fifty dollars I earned while using the borrowed funds elsewhere. This is how the entire lending-market system works.

This is the simplest and most basic strategy for generating passive income on strong assets, such as Bitcoin or Ethereum.

What Happens When the Price Falls?​

But what happens if I deposit zero point twenty-five Bitcoin as collateral — worth two thousand five hundred dollars at the current price — take a one-thousand-dollar loan, and then the price of Bitcoin starts falling?

The price of Bitcoin approaches the value of my loan. A little more — and the collateral will be worth less than the loan. In theory, this would allow me to run away with the money and never return it.

What happens in this case? The system triggers liquidation, which allows other participants to buy your collateral at a discount and repay your loan. Because there are liquidators who purchase collateral close to liquidation, all loans always remain one hundred percent secured.

Even if someone borrows one thousand dollars, disappears, and never repays the loan, their collateral is simply liquidated and paid to the participant who provided funds to cover the debt.

In this case, if the price of Bitcoin falls below a certain threshold (each asset has its own threshold and its own percentage), I simply lose my Bitcoin, but I still keep the one-thousand-dollar loan. I no longer have to repay it, because my Bitcoin has already been liquidated and my debt has been paid off for me.

Therefore, I can keep the one thousand dollars. This is, again, the worst-case scenario of what can happen. That is why it is better not to allow liquidation and to carefully monitor the price of the asset that is used as collateral for your position.

Summary​

To summarize: the foundation of decentralized finance consists of stablecoins, lending markets, decentralized exchanges, and oracles, which I will explain later. This is the fundamental base on which the entire decentralized finance ecosystem is built, as well as all strategies for creating passive income and growing capital in an investment portfolio.

This is the foundation, and on top of these lending markets and decentralized exchanges there are many additional instruments that can be combined to create strong passive-income strategies and earn within the decentralized finance ecosystem.

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

Let’s move on to decentralized exchanges. Exchanges are a fundamental element of the entire cryptocurrency ecosystem. Everything began with the creation of centralized exchanges, which made it possible to buy Bitcoin with dollars or stablecoins. Over time, more trading pairs appeared, allowing users to buy Ethereum and many other altcoins. Today, major players such as Binance, Bybit, and Coinbase dominate the centralized exchange market and allow users to purchase a wide range of cryptocurrencies.

How Centralized Exchanges Work​

You create an account, complete verification, and gain access to buying assets. Then you can withdraw them to your wallet if you choose. Trading on centralized exchanges takes place through order books — lists of buy and sell orders.

For example, if you want to buy one Bitcoin at thirty-nine thousand dollars, you place a buy order. If someone places a matching sell order at the same price, the orders are matched and the trade is executed.

Thus, all centralized exchanges operate using this order book mechanism.

How Decentralized Exchanges Work​

Decentralized exchanges operate using liquidity pools. This is a very important concept that needs to be understood, and I will explain it in detail in the next section.

In the case of centralized exchanges, the platform itself keeps all the fees.
But on decentralized exchanges, fees are distributed among the users who provided liquidity.

As a reminder, in the decentralized finance ecosystem all interaction takes place between users. There are no central authorities.

If I want to swap Ethereum for USDT, I do it through a decentralized exchange where other users have supplied assets into the liquidity pool. For example, if you hold Ethereum and USDT, you can provide liquidity to a decentralized exchange, enabling other people to swap ETH for USDT. For every swap, you earn a small percentage of the trading fee. There are many such trading pairs.

You can create a pair like ETH–BTC or any other combination with various altcoins. The higher the trading volume in your chosen pair, the higher your earnings, because you receive a portion of the fee from every swap within that pair.

This is why decentralized exchanges do not require verification or personal identification. You simply visit the platform, connect your wallet, and select a trading pair.

Example of a Swap​

If I buy one ETH for one thousand dollars, I will pay a 0.3% fee.
This fee is then distributed among all liquidity providers in that trading pair.

Liquidity pools can be very large: in some trading pairs liquidity reaches hundreds of millions of dollars.

Naturally, if you contribute one thousand dollars to a pool with enormous liquidity, your share will be extremely small. As a result, your fee income will also be small. Therefore, it is more profitable to choose pairs where trading volume is high, but total liquidity is relatively low.

Again, I go over this in detail in the module, where I explain how to choose the right trading pairs to maximize your yield using top passive-income tools.

Uniswap Example​

Here is what the interface of the Uniswap exchange looks like. I want to sell one ETH and receive stablecoins. In this case, the swap is executed fully decentralized and autonomous. I use the liquidity of the ETH–USDT pool, exchange ETH for stablecoins, pay a fee, and this fee is distributed among all liquidity providers in proportion to their share of the pool.

This is what the interface looks like from the liquidity provider’s perspective — the person who supplied assets to the trading pair. In this example, the liquidity belongs to the ETH–BTC pair. There is also a field showing incoming earnings: for every swap within the ETH–BTC trading pair, I receive yield in ETH and BTC.

These are not internal tokens and not worthless assets — the rewards are real coins.

So if the trading pair is ETH–BTC, the rewards are paid specifically in Ethereum and Bitcoin. I can claim these fees in a single transaction and then use them however I want: reinvest, swap into stablecoins, or withdraw to another wallet.

Key Parameters for High Yield​

This is how earning through decentralized exchanges works. And the key parameters for generating high yield on a trading pair are:

• Trading volume
• Total liquidity in the pool
• The ratio of volume to liquidity

The higher the trading volume, the higher the income for those who provide liquidity to that trading pair.

What Assets Should You Use for Liquidity?​

It is also recommended — and ideally required — to provide liquidity only to pairs made up of assets that are already in your portfolio.

If your portfolio includes Bitcoin, Ethereum, and stablecoins, then you should only provide liquidity to pairs involving Bitcoin, Ethereum, and stablecoins.

You should not buy an asset solely because the pair shows high volume, high yield, or large fees.
Use only the assets you already own and open trading pairs with them.

However, this is not as simple as it seems. You need to understand:

• how liquidity works,
• how fees are distributed,
• and which blockchain offers the best conditions for providing liquidity to a specific trading pair.

Decentralized exchanges exist on different blockchains, and each blockchain has its own yield levels, trading volumes, and fee structures. I explain all of this in detail in the module: how to choose the right pairs, how to manage positions efficiently, and how to maximize yield using decentralized exchanges.

Combining Tools for Advanced Strategies​

In addition, this is only one fundamental tool for earning. All these trading pairs and exchanges can be combined with other instruments — for example, lending markets. By using them together, you can build complex strategies that offer higher returns but also come with higher risks.

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

In this lesson, I will explain the main tools in the DeFi ecosystem — the fundamental components on which the entire system is built. These elements form the base layer of decentralized finance. As a reminder, everything works exclusively through smart contracts. Smart contracts are the mechanism that allows DeFi to function without trust in third parties or dependence on centralized authorities.

Smart contracts ensure security and decentralization within DeFi. They operate using cryptography and are stored on the blockchain. This gives them immutability: once deployed, a smart contract cannot be deleted or altered. For this reason, nearly all decentralized services exist as smart contracts and operate without the need for trust in any intermediary. There is no verification, no account registration — you simply connect your wallet and interact directly with the contract.

As mentioned earlier, all interaction in DeFi happens between users. There are no central organizations or administrative bodies. Users interact with each other through smart contracts.

In centralized finance, the interaction model is client → organization, and everything is formalized through legal agreements. The difference is enormous.
In centralized systems, you must sign documents, complete verification, purchase insurance, and place your trust in a company that may or may not fulfill its obligations.

In decentralized finance, all conditions are written directly into the smart contract. And you can be certain they will be executed exactly as defined, because the blockchain enforces the rules automatically.

Core Components of DeFi​

The foundation of DeFi consists of four elements:

1. Stablecoins
2. Decentralized Exchanges (DEXs)
3. Lending Markets
4. Oracles

Oracles are a separate concept and are explained in detail in the DeFi Pro module.
In this lesson, we focus on the three core components: stablecoins, lending markets, and decentralized exchanges.

Stablecoins — the First Foundational Element​

Stablecoins are tokenized dollars (or other fiat currencies) that can be used on the blockchain.
Why are they needed?

Stablecoins are essential because:

• they allow you to manage your finances in a decentralized system,
• they are the base currency for trading,
• they act as a settlement asset across all protocols,
• they enable stable storage without converting back to fiat.

Stablecoins form the primary layer on which the entire DeFi ecosystem operates.
Users exchange tokens, buy Ethereum or Bitcoin using stablecoins, and store part of their assets in stablecoins. This makes stablecoins an integral and permanent part of DeFi.

Types of Stablecoins​

Stablecoins are divided into centralized and decentralized.

Centralized stablecoins​

These include:

• USDT
• USDC

They are issued by companies, which is why they are considered centralized.
This means USDT and USDC can be frozen directly on your wallet address, even if the tokens are stored in MetaMask, Keplr, or any other self-custodial wallet.

Most likely, this will never affect an average user.
But the freezing mechanism exists.

Why can stablecoins be frozen?​

Freezing is performed by the issuing company.
The reasons usually include:

• illegal activity,
• prohibited transfers,
• fraud,
• money laundering,
• sanctions enforcement.

If you simply use stablecoins normally, there is nothing to worry about. However, in theory, if sanctions target citizens of a specific region, centralized stablecoins could also be restricted.

This is why it is important to diversify and not keep everything in a single stablecoin.

Decentralized stablecoins​

These include:

• DAI
• FRAX

There are more decentralized stablecoins in existence, but DAI and FRAX are the only ones currently considered reliable.

Most other decentralized stablecoins carry major risks — poor collateral design, unstable mechanisms, or failures during volatility.
For this reason, we focus only on DAI and FRAX, since they are actively used and well established in DeFi.

Key Takeaway​

There is nothing wrong with using either centralized or decentralized stablecoins. Both types serve their role in the ecosystem. The most important principle is:

Do not store all your assets in one stablecoin. Diversify your stablecoin exposure to reduce risk.​

In the next lessons, we will examine the remaining foundational DeFi tools — decentralized exchanges and lending markets — and learn how they can be used to generate income.

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

Imagine being able to fully control your assets without relying on banks or government institutions. Achieving true financial freedom thanks to thousands of people building a decentralized financial system based solely on supply and demand. A system without intermediaries, where you can access any available financial tools and earn income without interacting with centralized platforms.

In short, DeFi — decentralized finance — is an area where anyone can freely use a wide range of financial instruments without involving centralized services. All interaction happens directly between participants, and security is ensured by smart contracts.

What Makes DeFi Possible?​

Smart contracts​

Smart contracts deployed on the blockchain execute actions automatically.
If information is written to the blockchain, it cannot be changed, deleted, or manipulated.
This is what makes DeFi systems reliable and censorship-resistant.

Decentralized Exchanges (DEXs)​

The most popular tool in DeFi is the decentralized exchange — a platform where you can swap cryptocurrencies without:

• centralized exchanges,
• KYC (identity verification),
• providing personal information.

All you need is your wallet.

DEXs cannot be blocked or frozen. No one can restrict your access — the system exists independently of any company.

How Users Earn in DeFi​

Since DeFi has no intermediaries, the income that centralized exchanges usually keep for themselves can be earned by users.

1. Providing liquidity​

If you have, for example:

• stablecoins, and
• a small amount of ETH,

you can add them to a liquidity pool.
Every time someone swaps assets within that pool, you receive a portion of the fees.

This creates an actual passive income stream paid directly to users, not corporations.

2. Lending and borrowing​

You can lend your:

• stablecoins,
• ETH,
• Bitcoin,
• or other assets,

and earn interest.

Loans are secured by overcollateralization:
the borrower must deposit more collateral than they borrow.
This ensures your funds cannot be stolen or withdrawn by anyone.

3. Earning from bridges​

Blockchain bridges allow transferring assets between networks.
Users can provide liquidity to these bridges and earn fees on cross-chain transfers.

Today, nearly every DeFi tool — DEXs, lending markets, bridges — provides opportunities for earning.

This works only because there are no intermediaries.
Users interact directly and provide services to one another.

Skills Needed for Success in DeFi​

DeFi is powerful, but it's not a magic money machine.
Here’s what you need:

• understanding liquidity,
• knowledge of the tools,
• risk management,
• the ability to combine several protocols into a single strategy.

This is exactly what I teach in the DeFi module — step-by-step, from beginner tools to advanced methods.

In the Strategies module, I provide ready-made solutions that you can simply copy and start using from day one.

DeFi Is Not Without Risk​

There is no “support hotline.”
If you approve the wrong transaction or interact with a malicious smart contract — your funds can be lost permanently.

There are many ways to earn, but also many ways to lose.

Responsibility lies 100% on the user.

Why Experience Matters​

I entered the field in 2018 and have seen DeFi evolve from simple experiments to a global financial system.
New protocols appear constantly — and I study all of them.
Strategies form automatically because of years of experience and deep understanding.

My goal is to help you:

• confidently use DeFi tools,
• understand the mechanics,
• build reliable, diversified income systems,
• increase capital step by step,
• grow your long-term investment portfolio.

What’s Next?​

In the next lesson, I’ll explain in detail the core tools of the DeFi ecosystem and how each of them can be used to generate income.

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

In this lesson, we’ll go through the full process of staking ADA, the native token of the Cardano blockchain, using the Yoroi Wallet — a lightweight and user-friendly wallet specifically designed for ADA staking.

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Step 1 — Install Yoroi Wallet​

The first step is to install the Yoroi Wallet browser extension.

1. Open the official Yoroi website and click Download.
2. Install the extension for Chrome, Firefox, or another supported browser.
3. Once installed, click the Yoroi icon in your browser toolbar.

You’ll be asked to choose the interface language (for example, English or Russian).
After skipping the introduction screens, you can either Create or Restore a wallet.

Creating or Restoring a Wallet​

• If you’re using a new device, select Create wallet — this will generate a new mnemonic phrase that you should back up and store securely.
• If you already have an existing phrase (for example, the same one used for other wallets on your device), select Restore wallet, choose Cardano, and pick the 24-word option.

Enter your mnemonic phrase manually (pasting the entire phrase at once is not allowed), assign a wallet name, and create a password for transaction signing.

Once complete, click Restore wallet — your wallet is now ready for use with the Cardano blockchain.

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Step 2 — Deposit ADA into the Wallet​

To stake, you’ll first need to transfer ADA tokens to your Yoroi wallet.

1. Open the Receive tab.
2. Copy your wallet address or scan the QR code.
3. On your exchange (for example, Bybit), select Withdraw ADA, paste your address, and choose the Cardano network.

Important: Cardano generates a new address after every transaction.
This is a privacy feature similar to Bitcoin’s UTXO model.
You can use any new address — all funds go to the same wallet.

Confirm the withdrawal, pay the network fee (about 2 ADA), and wait a few minutes.
Your ADA will soon appear in the Yoroi wallet balance.

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Step 3 — Open the Delegation List​

Once your funds are available, click on the Delegation List tab to view all available stake pools — the validators to which you can delegate your ADA.

Each pool displays:

• Pledge — how much ADA the pool operator has personally staked.
• Pool Size (Share) — total amount of ADA delegated to that pool.
• Annual Yield (APR) — average yearly staking return.
• Commission and Cost — fees charged by the pool.

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Step 4 — Choose a Staking Pool​

When selecting a pool, focus on the following key parameters:

1. Pledge:
   Indicates the pool operator’s personal investment.
   A high pledge (e.g., 1,000,000 ADA ≈ $300,000) shows commitment and reliability.

2. Pool Size:
   Ideally below 60–65 million ADA.
   Overfilled pools provide lower rewards per participant, while very small pools may have irregular performance.

3. Commission:
   The validator’s fee deducted from rewards, not your main balance.
   Most good pools charge around 1% and a fixed monthly cost (typically 340 ADA, distributed across all delegators).

4. Yield:
   Average ADA staking rewards are about 4–5% per year, depending on pool performance and commission rates.

Once you find a suitable pool — for example, one with 4%+ recent yield, low commission, and moderate size — click Delegate.

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Step 5 — Delegate ADA​

After selecting a pool:

1. Enter the amount of ADA to delegate.
2. Review the transaction summary, which includes:
   • Delegated amount
   • Network fee: 2 ADA (partly refundable)
   • Pool commission details
3. Enter your spending password and click Confirm.

Your transaction will be signed and broadcast to the Cardano network.
Once confirmed, your ADA tokens are successfully delegated to the chosen staking pool.

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Step 6 — Track Rewards and Staking Status​

Open the Dashboard to monitor:

• Staking status
• Selected pool details
• Rewards history
• Performance over recent epochs

Rewards accumulate automatically after each epoch (a Cardano epoch lasts about five days) and are visible in a separate rewards section.

You can manually claim them anytime using the Withdraw button — claimed rewards are added to your wallet balance.

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Step 7 — Manage or Redelegate Your ADA​

• To unstake, click Undelegate — your ADA becomes available after a short waiting period.
• To redelegate, choose another pool and confirm the transaction.
  This process is instant and does not require unstaking first.

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Step 8 — Automatic Staking of New Deposits​

If you send additional ADA to your wallet later, there’s no need to restake.
All newly received tokens are automatically delegated to your existing staking pool and start earning rewards immediately.

This is one of Cardano’s most convenient features — staking expands automatically as your balance grows.

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Step 9 — Security and Control​

• Your ADA never leaves your wallet — delegation doesn’t transfer ownership to the validator.
• Validators can’t access or withdraw your funds.
• You maintain full control and can claim, redelegate, or withdraw rewards anytime.
• Always back up your mnemonic phrase — it’s the only way to restore access to your wallet.

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✅ Summary​

Parameter	Details
Wallet	Yoroi Wallet
Blockchain	Cardano
Token	ADA
Annual Yield	4–5%
Typical Pool Size	< 60 million ADA
Average Commission	~1% + 340 ADA fixed cost
Redelegation	Instant
Automatic Restaking	Yes
Funds Custody	Always remain in your wallet

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In summary:

ADA staking is one of the simplest and safest forms of passive income in crypto.
All you need is a Yoroi Wallet, a small balance of ADA, and a reliable pool.
Your tokens stay under your control, and new deposits join staking automatically.

In the next lesson, we’ll explore staking on the Binance Smart Chain (BSC) and how to delegate the BB Token step by step.

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

In this lesson, we’ll go step by step through how to stake ATOM, the native token of the Cosmos blockchain.
You’ll learn how to set up a Keplr Wallet, transfer ATOM from an exchange, choose a validator, and start earning staking rewards.

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Step 1 — Install and Set Up Keplr Wallet​

To stake ATOM, you’ll need the Keplr Wallet, which is available as:

• A browser extension for Chrome or Firefox, and
• A mobile app for iOS and Android.

In this example, I’ll use the Chrome extension.

1. Go to the Chrome Web Store and install Keplr.
2. After installation, click the Keplr icon in your browser.
3. Select Import Existing Wallet — if you already have a seed phrase — or Create New Wallet if this is your first time.
4. Choose the 24-word phrase option, enter your mnemonic phrase, assign a wallet name, and create a password for transaction signing.

✅ Once complete, your Keplr wallet is ready for use.

If you have a Ledger hardware wallet, you can connect it directly for enhanced security instead of using a software wallet.

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Step 2 — Buy ATOM Tokens​

Before staking, you’ll need to purchase ATOM.
You can buy it on most major exchanges — here, we’ll use Bybit.

1. Log in to Bybit.
2. Search for the ATOM/USDT trading pair.
3. Choose your order type:
   • Limit order — executes at your set price (might take time).
   • Market order — executes instantly at the best available price.
4. Buy the desired amount (for example, $10 worth of ATOM).

At the time of recording, 1 ATOM ≈ $9, so a single token is sufficient for demonstration.

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Step 3 — Withdraw ATOM to Your Keplr Wallet​

After purchasing ATOM:

1. Go to the Withdraw section on Bybit.
2. Paste your Cosmos (ATOM) wallet address from Keplr.
3. The exchange will automatically detect the Cosmos network.
4. Double-check the network and address to avoid mistakes.

Important: Some transfers require a Tag or Memo field to identify your account.

• When sending to an exchange, you usually must include it.
• When sending to your own wallet, it’s typically unnecessary.
  Omitting a required Memo can result in lost funds — although most exchanges can help recover them if contacted promptly.

Enter the withdrawal amount, confirm, and pay a small network fee.
Within a few minutes, your ATOM tokens should appear in your Keplr wallet.

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Step 4 — Start Staking ATOM​

Now that your wallet is funded, you can start staking.

1. Open Keplr Wallet and click the Stake section.
2. You’ll be redirected to the Cosmos Dashboard.
3. Review your total ATOM balance and select a validator.

Choosing a Validator​

Two main factors to consider:

• Commission: The percentage the validator takes from your rewards.
• Annual Yield (APR): The expected return, typically 17–20% per year.

Avoid validators with 0% or 100% commissions — they can change fees without notice, sometimes taking all rewards.
A 5–7% commission from a reputable validator is ideal.

You can also delegate to well-known validators such as Multichain or official exchange nodes, which usually offer stable and transparent conditions.

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Step 5 — Delegate Your ATOM​

1. Click Manage → Delegate.
2. Enter the amount you want to stake — for example, 1 ATOM.
3. Confirm the transaction in your Keplr wallet.

A message will appear reminding you that:

Staking locks funds for 21 days — the unbonding period before unstaking becomes possible.

After confirmation, your ATOM is officially staked and starts generating rewards.

In the dashboard, you’ll see:

• Total staked amount,
• Available balance, and
• Selected validator details.

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Step 6 — Manage, Redelegate, or Unstake​

Unstaking (Undelegate)​

• Go to Manage → Undelegate.
• The unbonding process takes 21 days.
• After this period, your ATOM becomes available for withdrawal.

Redelegating​

• You can move your stake between validators instantly using the Redelegate option — no 21-day wait.

Claiming Rewards​

• Rewards accumulate automatically and can be claimed anytime.
• Click Claim Rewards, sign the transaction, and your rewards appear in your wallet balance.

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Step 7 — Understanding Staking Yields​

The average annual yield for ATOM staking is around 17–20%, depending on:

• Validator uptime and performance,
• Network inflation and block reward rates,
• The number of active validators and staked tokens.

Rewards are paid in ATOM, compounding your holdings over time.

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Security and Control​

Even if a validator changes its commission rate or stops operating, they cannot access your funds —
your staked ATOM always remains under your full control.

Only staking rewards may be affected by validator settings, so periodically review your delegation choices.

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✅ Summary​

Parameter	Details
Wallet	Keplr
Asset	ATOM (Cosmos Network)
Average Yield	17–20% per year
Unbonding Period	21 days
Validator Commission	Typically 5–7%
Network Fees	Minimal
Redelegation	Instant
Reward Claiming	Manual

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In summary:

You can stake ATOM directly from your Keplr Wallet, delegate to a trusted validator, and start earning rewards — all within minutes.

In the next lesson, we’ll move on to staking on the Binance Smart Chain (BSC) and explore how to stake the BB Token step by step.

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