Bank Deposit vs DeFi Staking

Global cryptocurrency investors reap rewards through cryptocurrency lending and staking. DeFi protocols provide great incentives to those who stake cryptocurrency and secure them onto a smart contract platform with interest and governance tokens. Investors who place assets on crypto exchanges will receive high returns. Borrowers who use their crypto assets as collateral for loans can get low-interest loans from crypto lenders.

The most revolutionary innovation in blockchain technology is the DeFi. This innovative financial system revolution has reshaped the financial landscape and redefined traditional financial services, such as trading, investing, paying, insurance, lending, trade, and investment.

DeFi staking provides a good yield on staking coins, but it does not provide the same security as centralized finance, where your money is kept by banks or other third parties in standard savings accounts. The interest rate for bank deposits in traditional banking is lower than that offered for DeFi staking, but all savings accounts are insured by FDIC at every bank. This includes principal, accrued interest, and interest.

If you’re facing a dilemma about which passive income option to choose, we got you covered. We will be comparing DeFi lending and staking to help you decide which option is best for you. 

Let’s get right to it!

DeFi: What is it?

The umbrella term “Decentralized finance” refers to a network of peer-to-peer financial services that is decentralized and trustworthy. To better understand decentralized finance, let’s look into centralized finance first.

What’s Centralized Finance?

The centralized financial system includes all major financial services that we use every day, such as banking, stock, bond, and commodities markets. This system has a central authority, or intermediary, that oversees and controls all financial transactions. These include lending, borrowing and banking. It can take weeks, if not months to get a loan through a central financial system. A loan cannot be obtained until your credit rating and past history have been approved. Many people living on the fringes are denied financial services. Additionally, significant losses have been recorded due to these intermediaries’ inherent greed or corruption, as seen during the 2008 financial crisis.

Bitcoin provided a way to overcome all of the weaknesses of traditional finance. Ethereum’s blockchain enabled mass adoption across the globe of DeFi.

Decentralized Finance (DeFi).

By removing intermediaries, decentralized finance redefines financial services like lending, investing, payments, and insurance.

DeFi makes it possible to make almost immediate peer-to-peer payments and financial transactions using blockchain or distributed ledger technology. DeFi plays a key role in scaleability due to its instantaneous, low-cost transactions. DeFi eliminates the need for intermediaries and replaces them with self-executing smart contracts. Smart contracts are codes written on blockchain networks that contain all pre-agreed conditions to ensure a successful transaction. DeFi allows everyone with an internet connection to have access to financial services. Funds are kept in an anonymous crypto wallet such as the CoinStats WalletYou can use it just as you would regular money. 

What does DeFi do?

The trustless network of decentralized finance gives investors complete control over assets and investments. DeFi stores the transaction data on the blockchain using distributed ledger tech (DLT) and blockchain. DeFi applications manage all transactions on the Blockchain. These transactions are verified by users of the network without being controlled by institutions.

Mining is used in Proof-of-work consensus mechanisms to verify transactions. In Proof-of-Stake consensus mechanisms, transactions are verified using the staking process.

The financial system is free of central control and institutions. All users can access DeFi services from any device connected to the internet. They have total control over all digital assets.

Examples of decentralized finance

DeFi, a new financial technology that is rapidly gaining popularity has many real-world applications.

Decentralized Exchange

Digital marketplaces that allow individuals to trade cryptocurrencies and NFTs, or even place their crypto assets for interest. Decentralized crypto exchanges (DEX) are not managed by any intermediary or central business. Instead, they operate over blockchain and charge no fees other than the applicable gas fee on each blockchain. Instead of earning fees as a market maker, trading company or broker used to make, DEX users are able to invest in a liquidity pool. The DEXs do not have custody and are dependent on the liquidity supplied by liquidity miners or yield farmers.

However, central exchanges tend to be the best for trading cryptocurrency, even though it comes with a commission.

Sending money

Decentralized apps allow users to send money immediately from one place to the next. There is no network fee and there are no fees.  Transaction fees are also charged for similar transactions that take place in traditional finance. DApps money transfers are instantaneous and efficient thanks to smart contracts that automate the process.


Stablecoins, crypto assets, are tied to real-world assets, such as gold and fiat currencies. Stablecoins most often have a pegged value against the U.S. Dollar, such as USDT, USDC and DAI.

DeFi Lending

One of the best ways to earn passive income from your crypto assets is through DeFi lending. DeFi Pulse reports that the total value of DeFi loans is $1.01 trillion, with more than 75% locked into lending services. A cryptocurrency loan can be obtained by anyone. This is in contrast to traditional finance which requires you meet some eligibility requirements.

The principle of crypto lending is similar to a savings account in a bank. Crypto lenders deposit crypto assets in a pool that other people can borrow money from. They also earn interest. However, unlike a bank deposit, the funds in the pool aren’t FDIC insured.

There are two types of borrowing – peer-to-peer borrowing and borrowing from liquidity pools. Peer-to-peer borrowing allows individuals to borrow directly from each other using smart contracts. In liquidity pool-based lending, the lenders supply market liquidity through the provision of crypto assets.

DeFi protocol (network liquidity) determines the lending and borrowing rates. Incentives can include a share of transaction fees or interest from lenders. These returns are usually expressed in an annual percentage yield (APY).

DeFi Staking

DeFi staking is a rewards-type system that involves locking crypto assets in your cryptocurrency wallet for a specific period to verify transactions, contribute to the blockchain network’s performance and safety, and earn staking rewards in return.

Proof-of-Stake Blockchains support staking. Users who invest coins to verify transactions and validate blocks are known as validators or nodes.

According to Staking Rewards data, the total market capital for staking is more than $18.5 billion with over $9.9 trillion in stakes.

Let’s look into DeFi staking compared to a traditional bank deposit.

Bank Deposit vs. DeFi Staking

Savings accounts are a popular way to get interest on your investment. Even though banks will pay regular interest rates on savings, you’ll only get an APY between 1-2% and 3.5 percent for the most basic saving accounts. The inflation rate is almost the same in many countries. 

Banks offer low interest rates because they make use of your deposit to earn their income. They can lend you money or invest with it. They offer interest on deposits for a portion of their profits from such business activities.

A major advantage of traditional bank deposits, is that money can be withdrawn at any moment without penalty. Bank deposits have the disadvantage of not having control over your assets. The banks may freeze assets and limit the amount that can be withdrawn during financial crises. High risk traditional savings accounts are also available as they can be insured. Fiat currencies, on the other hand, tend to fluctuate less than 1% per day and have a lower volatility rate. And finally, it can take several days to open a savings account — and there’s still the possibility of being rejected. 

DeFi Staking offers staking rewards of between 5 and 20 percent. The process for staking cryptocurrency takes only seconds. However, among the drawbacks of staking is that you can’t withdraw your assets earlier than the end of the staking period, and if you do, you might be charged a penalty or even lose the interest earned. Due to their unregulated nature and volatility, it is possible for cryptocurrencies to become lost, even if you are rewarded with staking. In addition, new crypto coins are created by the network, which can then be distributed to reward users, increasing their total circulation. The supply of new coins is reduced, which results in inflation. This also has an impact on the actual return you will get.

CoinStats Earn offers huge rewards for DeFi stakestaking.

CoinStats Earn

CoinStats Earn

CoinStats Earn has been registered as a trademark of CoinStats. It allows you stake your crypto assets into some of the top-handpicked protocols, with an APY of up to 20 percent. CoinStats earn gives you full control of your assets. It never requests your wallet seed phrase. The calculator can be used to estimate your potential rewards and help you plan for the staking process.

Even for beginners, the interface is simple to understand and use. There are no fees for stakes.


The financial industry will be impacted by DeFi services including crypto staking. This provides investors new ways to earn passive income. DeFi will now offer more rewards for staking, with Ethereum becoming a Proof of Stake consensus platform.

While we do our best to give accurate, unbiased and reliable information, the information provided is not guaranteed.

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Information about Investments The opinions expressed in this article are provided to you solely for informational purposes and do not constitute a recommendation by CoinStats to buy, sell, or hold any securities, financial product, or instrument mentioned in the content, nor do they constitute investment advice, financial advice, trading advice, or any other type of advice.

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