How to Earn Passive Income with Peer-to-Peer Lending
Earning passive income through peer-to-peer (P2P) crypto lending allows investors to lend cryptocurrencies directly to borrowers, bypassing traditional intermediaries. This can occur on centralized platforms, which manage the process, or decentralized finance (DeFi) platforms, which use smart contracts. Lenders earn interest while borrowers access funds without liquidating assets. Liquidity pools in DeFi facilitate scalable lending, with interest rates adjusting based on supply and demand. Centralized platforms replicate traditional fintech experiences, while decentralized platforms are governed by communities and operate transparently. Key factors in choosing a platform include security, interest rates, flexibility of lending arrangements, and user experience. Risks include market volatility and potential platform failures. Strategies for maximizing passive income involve creating exit plans and setting yield benchmarks. Crypto lending differs from staking in mechanics and risk profiles.
