Earning Comparison and Selection

Comprehensive comparison of DeFi and CeFi earning methods to help you find the most suitable earning strategy.

Overview

Stablecoin earning methods are diverse, each with its own characteristics and use cases. This guide will provide detailed comparisons of various earning methods to help you make informed choices.

Comprehensive Earning Method Comparison

Comparison Table

Earning Method	Type	Annual Yield	Risk Level	Liquidity	Technical Barrier	Suitable For
CeFi Demand	CeFi	3-8%	Medium	High	Low	Beginners, conservative investors
CeFi Time	CeFi	5-12%	Medium	Low	Low	Steady investors
DeFi Lending	DeFi	3-15%	Medium-High	High	Medium	Users with some experience
Liquidity Provision	DeFi	5-30%	High	Medium	Medium-High	DeFi users
Yield Farming	DeFi	10-50%+	Very High	Medium	High	Professional investors
Stablecoin Staking	DeFi	5-15%	High	Low	Medium	Long-term holders

Detailed DeFi vs CeFi Comparison

1. Yield Rate Comparison

DeFi Advantages:

• ✅ Usually higher yields (5-30%+)
• ✅ May receive multiple token rewards
• ✅ Yields may change with market

CeFi Advantages:

• ✅ Relatively stable yields (3-12%)
• ✅ Predictable, won't suddenly change
• ✅ Suitable for long-term planning

Conclusion:

• Pursue high returns: Choose DeFi
• Pursue stable returns: Choose CeFi

2. Risk Comparison

DeFi Risks:

• ⚠️ Smart contract risk (code vulnerabilities)
• ⚠️ Impermanent loss (liquidity provision)
• ⚠️ Project risk (new projects may fail)
• ⚠️ Technical risk (operation errors)

CeFi Risks:

• ⚠️ Platform risk (rug pull, hacked)
• ⚠️ Regulatory risk (shut down by regulators)
• ⚠️ Liquidity risk (withdrawal suspension)
• ⚠️ Interest rate risk (yield decline)

Conclusion:

• DeFi: Mainly technical risks
• CeFi: Mainly platform risks
• Both have risks, need assessment

3. Operation Difficulty Comparison

DeFi:

• ⚠️ Need to connect wallet
• ⚠️ Need to understand smart contracts
• ⚠️ Need to pay gas fees
• ⚠️ Relatively complex operation

CeFi:

• ✅ Simple operation, like banks
• ✅ Customer support available
• ✅ No technical knowledge needed
• ✅ Good user experience

Conclusion:

• Beginners: Recommend CeFi
• Experienced: Can choose DeFi

4. Liquidity Comparison

DeFi:

• ✅ Most can withdraw anytime
• ✅ No waiting needed
• ⚠️ May need to pay gas fees

CeFi:

• ✅ Demand can withdraw anytime
• ⚠️ Time deposits cannot withdraw during lock period
• ⚠️ May suspend withdrawals

Conclusion:

• Need high liquidity: Choose DeFi or CeFi demand
• Can lock: Choose CeFi time

5. Transparency Comparison

DeFi:

• ✅ All operations verifiable on-chain
• ✅ Open source code
• ✅ Public audit reports

CeFi:

• ⚠️ Lower transparency
• ⚠️ May not disclose fund usage
• ⚠️ Depends on platform disclosure

Conclusion:

• Value transparency: Choose DeFi
• Don't mind transparency: Can choose CeFi

Choose Based on Needs

Scenario 1: Complete Beginner

Recommendation:

• 100% CeFi demand deposits

Reason:

• Simplest operation
• Relatively low risk
• Customer support available

Expected Yield: 3-6% annual

Scenario 2: Some Experience, Pursue Stability

Recommendation:

• 60% CeFi (demand + time)
• 40% DeFi lending

Reason:

• Balance risk and return
• Relatively simple operation
• Higher yield

Expected Yield: 5-10% annual

Scenario 3: Familiar with DeFi, Pursue High Returns

Recommendation:

• 30% DeFi lending
• 40% Liquidity provision
• 30% Yield farming

Reason:

• High yield
• Fully utilize DeFi advantages
• Need technical ability

Expected Yield: 10-25% annual

Scenario 4: Conservative Investor

Recommendation:

• 70% CeFi demand (multiple platforms)
• 30% DeFi lending (audited protocols)

Reason:

• Lowest risk
• Stable yield
• Diversified investment

Expected Yield: 3-8% annual

Scenario 5: Aggressive Investor

Recommendation:

• 20% DeFi lending
• 40% Liquidity provision
• 40% Yield farming (including new projects)

Reason:

• Pursue highest returns
• Can bear high risks
• Have time and energy

Expected Yield: 15-40%+ annual

Recommended Combination Strategies

Conservative Combination (Risk: Low)

Allocation:

• 50% CeFi demand (2-3 platforms)
• 30% CeFi time (3-6 months)
• 20% DeFi lending (Aave, Compound)

Expected Yield: 4-8% annual

Advantages:

• Low risk
• Stable yield
• Simple operation

Steady Combination (Risk: Medium)

Allocation:

• 40% CeFi demand/time
• 30% DeFi lending
• 20% Stablecoin pair liquidity provision (Curve)
• 10% Yield farming (well-known projects)

Expected Yield: 6-12% annual

Advantages:

• Balance risk and return
• Higher yield
• Relatively stable

Aggressive Combination (Risk: High)

Allocation:

• 20% DeFi lending
• 30% Liquidity provision (various pairs)
• 30% Yield farming
• 20% New projects (high risk)

Expected Yield: 12-30%+ annual

Advantages:

• High yield
• Diversified

Disadvantages:

• Very high risk
• Need significant time

Selection Decision Tree

Start
  │
  ├─ Newbie? → Yes → CeFi Demand
  │              │
  │              └─ No
  │                 │
  │                 ├─ Pursue stability? → Yes → CeFi Time + DeFi Lending
  │                 │              │
  │                 │              └─ No
  │                 │                 │
  │                 │                 ├─ Familiar with DeFi? → Yes → Liquidity + Yield Farming
  │                 │                 │              │
  │                 │                 │              └─ No → DeFi Lending
  │                 │                 │
  │                 │                 └─ Can bear high risk? → Yes → Yield Farming
  │                 │                                    │
  │                 │                                    └─ No → Liquidity Provision
  │                 │
  │                 └─ Capital size?
  │                    │
  │                    ├─ < $1,000 → CeFi Demand (consider gas fees)
  │                    │
  │                    ├─ $1,000-$10,000 → Combination strategy
  │                    │
  │                    └─ > $10,000 → Diversify, multiple methods combination

Actual Yield Calculation

Considerations

1. Nominal Yield

• Yield shown by platform or protocol
• Example: 8% annual

2. Actual Costs

• Gas fees (DeFi)
• Platform fees
• Time costs

3. Risk Adjustment

• Consider possible losses
• Consider liquidity restrictions
• Consider market volatility

Calculation Example

Scenario: DeFi lending $10,000, nominal yield 8%

Nominal return: $10,000 × 8% = $800/year

Actual costs:
- Gas fees (deposit + withdraw): $50
- Time cost: Ignore

Actual return: $800 - $50 = $750/year
Actual yield: $750 / $10,000 = 7.5%

Risk adjustment:
- Consider smart contract risk (assume 1% loss probability)
- Risk-adjusted yield: ~7%

Common Selection Misconceptions

Misconception 1: Only Look at Yield

Wrong Approach:

• Only choose highest yield method
• Ignore risks

Correct Approach:

• Consider risk and return comprehensively
• Choose appropriate risk-return ratio

Misconception 2: Over-Concentration

Wrong Approach:

• Put all funds in one platform or protocol
• Only use one earning method

Correct Approach:

• Diversify across multiple platforms
• Use combination of multiple earning methods

Misconception 3: Ignore Gas Fees

Wrong Approach:

• Frequent operations with small amounts
• Don't consider gas fee costs

Correct Approach:

• Small amounts choose low gas fee methods
• Or use Layer 2
• Reduce operation frequency

Misconception 4: Blindly Pursue High Returns

Wrong Approach:

• Only choose highest yield
• Don't consider risk tolerance

Correct Approach:

• Choose based on risk tolerance
• Don't invest more than you can afford to lose

Regular Evaluation and Adjustment

Evaluation Cycle

Recommended Frequency:

• Check yield rate monthly
• Evaluate strategy quarterly
• Comprehensive adjustment annually

Evaluation Content

1. Yield Evaluation

• Does actual yield meet expectations
• Compare with market average
• Need adjustment?

2. Risk Evaluation

• Are platforms/protocols safe
• Are there new risks
• Need to adjust allocation?

3. Liquidity Evaluation

• Need to withdraw funds?
• Is liquidity sufficient?
• Need to adjust lock period?

Adjustment Strategy

When to Adjust:

• Yield significantly declines
• New risks emerge
• Market environment changes
• Personal situation changes

How to Adjust:

• Adjust gradually, don't make big changes at once
• Maintain diversified investment
• Test new strategies before expanding

Summary

When choosing stablecoin earning methods, need to:

1. Understand Yourself: Risk tolerance, technical ability, time investment
2. Understand Market: Characteristics and risks of various earning methods
3. Diversify Investment: Don't put all funds in one place
4. Continuous Learning: Market is changing, need continuous attention
5. Regular Evaluation: Adjust strategy based on situation

Core Principles:

• Risk and Return are Proportional: High returns necessarily come with high risks
• Diversify to Reduce Risk: Don't over-concentrate
• Choose What Suits You: Don't blindly follow trends
• Continuous Learning and Adjustment: Market is changing

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Related Guides:

• 📊 Earning Strategies Overview - Learn about all earning methods
• 🌐 DeFi Earning Methods - Deep dive into DeFi
• 🏦 CeFi Earning Methods - Deep dive into CeFi