DeFi Lending: How to Earn Interest on Digital Assets using Trust Wallet
Learn how you can earn interest on your crypto holdings directly in your Trust Wallet app.
DeFi lending has emerged as one of the most popular use cases in the decentralized finance market as it enables anyone across the globe with an internet connection to earn interest on digital funds.
In this guide, you will learn what DeFi lending is and how you can earn interest on crypto directly in your Trust Wallet.
What is DeFi Lending?
DeFi lending refers to depositing digital assets into autonomous, smart contract-powered lending pools to earn interest on crypto holdings.
In light of the high demand for borrowing cryptoassets from professional traders and trading firms, decentralized lending pools typically pay a much higher interest rate than traditional savings accounts or money market funds.
For example, depositing funds in a traditional savings account in the US currently nets you a modest 0.50% to 0.57% APY. Conversely, converting US dollars into the stablecoins USDC and depositing it in the Compound lending pool, nets you a lofty 9.09% APY (at the time of writing).
As a result of well-above-average interest rates, lending has become one of the most popular DeFi use cases, with $30+ billion locked in DeFi lending protocols.
How to Lend Crypto in DeFi Lending Markets using Trust Wallet
Trust Wallet enables you to deposit funds stored in your wallet directly into DeFi protocols to earn interest on your digital asset holdings.
To show you how, we will provide two examples: lending Ethereum tokens on Compound and lending Binance Smart Chain tokens on Venus.
Earning Interest on Ethereum (ERC20) Assets using Compound
Compound is a decentralized money markets protocol that operates on the Ethereum blockchain. It’s also one of the most trusted and longest-standing DeFi protocols in the market. At the time of writing, $9.9+ billion in Ethereum-based assets are held in Compound’s DeFi lending pools.
To access Compound, open Trust Wallet and click on the DApp Browser.
Type app.compound.finance into the DApp Browser search bar to find the app.
Make sure your DApp Browser is connected to Ethereum (by checking the logo on the top left). If it is, your Ethereum wallet will automatically connect to Compound and you can access the platform.
Now, you can view all lending markets and choose the asset you would like to deposit to earn interest. Let’s go with USDC.
Click on the USDC market to view the supply APY and distribution APY (paid in COMP tokens).
Next, click ‘Enable’ and confirm the transaction using your Trust Wallet. (You will need ETH in your wallet to cover gas fees.)
Once enabled, you can choose how much USDC you would like to deposit and then click ‘Supply.’
Finally, you confirm the transaction using your Trust Wallet and that’s it.
Lending digital assets in the DeFi markets is that simple!
To withdraw your funds, access Compound again in your Trust Wallet DApp Browser and click on the USDC supply market. Now, you will have the option to withdraw. Simply type in the amount of USDC you would like to withdraw and hit the button.
Your initial supply of USDC plus interest received in USDC and the COMP tokens you receive as an incentive to use the platform will then all be available in your Trust Wallet.
Earning Interest on Binance Smart Chain (BEP20) Assets using Venus
Venus is a decentralized lending marketplace operating on Binance Smart Chain (BSC) with a focus on stablecoins. At the time of writing, over $5 billion are deposited in the Venus protocol, making it the number one lending DApp on BSC.
To access Venus, open your Trust Wallet DApp Browser.
Then, you search for Venus under ‘DeFi’ and click on the app.
Venus will then open in your DApp browser and connect automatically to your Binance Smart Chain wallet.
On Venus, scroll down the dashboard and choose which asset you want to lend.
Let’s choose BUSD. BUSD pays 10.27% APY + 1.55 % Distribution APY (at the time of writing).
Then, click on BUSD on the dashboard and a pop-up will appear.
The pop-up will show you the details of the BUSD Supply Market and asks you to click ‘Enable’ the asset for lending.
Click ‘Enable’ and sign the transaction using Trust Wallet. (Ensure you have BNB (BEP20) in your wallet to cover gas fees.)
Then, decide how much BUSD you want to deposit and click ‘Supply.’
Finally, you will be asked to sign the transaction using Trust Wallet.
That’s it! You are now lending BUSD via the Venus protocol.
To withdraw your deposited funds, you simply access the ‘BUSD Supply Market’ and click ‘Withdraw.’ All your deposited assets (plus interest and the XVS tokens you receive as part of the Distribution APY will land in your Trust Wallet.
DeFi Lending Risks
Before you go and put all your digital assets “to work” in the DeFi markets, you should be aware of the main risk DeFi lenders face.
Protocol risk: If you are depositing assets in a DeFi protocol, there is a chance that you could lose all your funds should the DApp’s smart contracts have vulnerabilities that can be exploited. This is typically referred to as protocol risk, code risk, or smart contract risk.
Therefore, it is generally advisable only the use established protocols that have been audited by third-party smart contract auditors to reduce the risk of losing funds due to a smart contract vulnerability.
What’s more, you should never lend (or invest) more than you can afford to lose. Especially, in an immature market, like DeFi.
Trust Wallet: Your Homebase for DeFi Lending
Arguably the easiest way to starting lending your cryptoassets out in the DeFi markets is using Trust Wallet. The leading non-custodial mobile wallet enables you to securely store your digital assets and allows you to deploy them in DeFi protocols directly in the app’s DApp Browser.
Trust Wallet enables anyone with an internet connection to access the DeFi lending markets with a few clicks in its mobile app.