Financial technology, such as online payment systems and digital banking, has opened up many possibilities for us to take better control of our finances and manage them the way we want to. Decentralized finance, also known as “DeFi,” is another step toward that direction that aims to give users even more freedom over their finances.
DeFi pertains to financial services that operate under a decentralized infrastructure, meaning that there aren’t any intermediaries or middlemen, such as banks, involved in transactions. Instead, users can transact directly with each other, which makes DeFi transactions more accessible, transparent, and resistant to censorship.
One innovation that benefits greatly from DeFi principles is cryptocurrency. So long as you own any crypto wallet, such as an XMR wallet, and have internet access, you can trade, purchase, and transfer crypto assets with other users. This makes it an attractive option for people who highly value privacy and accessibility in their financial transactions—moms spending for their families included.
However, not everyone is familiar with how to utilize DeFi for their means just yet, particularly among households. Perhaps you’re a mom interested to know more about DeFi to see if it can help you better manage your family finances and build financial security for your home. If so, here are some ways in which DeFi can benefit you in your life as a mom:
1. Earning Passive Income
DeFi platforms provide various opportunities for moms to earn passive income. One way is by participating in lending platforms such as Aave, Compound, and MakerDAO, where one can deposit their cryptocurrency assets for other users to borrow. Lenders can then earn interest, typically at a higher rate than traditional banks, allowing them to earn money on the side.
Putting a reasonable portion of your family’s savings into DeFi lending platforms can help your money work harder and give your family assets a boost. Most DeFi platforms are also very flexible, meaning you can withdraw your funds anytime you need to.
2. Investing in Stablecoins
Cryptocurrencies can be highly volatile, which can deter people with low-risk investment preferences from investing in them. If you’re among those people, you can look into investing in stablecoins instead. Stablecoins are a type of cryptocurrency that have their value pegged to a stable asset, such as the US dollar or other fiat currencies, thus reducing the volatility typically associated with other crypto coins.
Investing in stablecoins can serve as a great entry point into DeFi for moms who purposefully don’t want to worry too much about crypto’s volatility. You can start by converting a portion of your savings into stablecoins and using them to earn additional income through lending or staking, i.e. locking up your crypto in a blockchain network to earn rewards.
3. Building an Emergency Fund with Higher Yields
Emergency funds are important in cases when unexpected situations may arise with families. While the emergency fund isn’t being used, it could be beneficial to keep it in an account where it can earn high enough interest rates to give the principal amount an additional boost.
Fortunately, many DeFi savings accounts, such as Nexo, can offer higher yields compared to traditional banks, allowing you to grow your emergency funds steadily over time. Since assets can also be withdrawn at any time, you won’t have to worry about not having access when you do need to use your emergency funds.
4. Enhancing Financial Control with DeFi Wallets
True to the principles of DeFi, a DeFi wallet allows users to gain full control over their funds without any intervention from intermediaries. With your own DeFi wallet, you can manage funds and investments for yourself, your partner, and your children without constantly needing to deal with steep bank fees or delays. This control also offers a more personalized approach to financial management since you aren’t limited by bank terms and conditions—a freedom that you may welcome as a mom with her own needs and perspectives.
Today’s DeFi wallets are also known for their strong security features. Wallet providers regularly release patches to keep your wallet safer from any new vulnerabilities or threats that target crypto users. These can increase your chances of your funds being protected and passed on in the future the way you would like.
5. Using Decentralized Insurance
Another way for moms to explore financial security for their cryptocurrency transactions is to use the services of DeFi insurance platforms such as Nexus Mutual and InsurAce. Insurance policies from these platforms provide a safety net against risks such as smart contract failures or hacks.
If part of your family’s savings or emergency funds are invested in crypto assets, then having them covered by a DeFi insurance can give you a little more peace of mind and add a layer of security to your assets as you navigate the DeFi market. This may, in turn, make you more confident about growing your family’s assets through DeFi avenues.
6. Automated Investment Platforms
As a busy mom, it may admittedly be difficult for you to squeeze in and keep track of the crypto market and price trends alongside your other duties. This is where automated DeFi investment platforms can help you out.
These platforms will allow you to automatically allocate and optimize investments so that you can maximize your returns without spending unnecessary hours on a platform and forgetting to invest at all. They might appeal to you if you’re looking for a hands-off strategy for your investments and a way to focus more on your other responsibilities without sacrificing your potential gains.
The broad goal of DeFi is to provide people with more control over their finances, allowing them to complete transactions unrestricted by intermediaries and other institutions. When DeFi gets more mainstream, more moms can benefit from DeFi technologies and build financial security for their family’s assets. This article can be your starting point for exploring the DeFi market and making forward-thinking financial decisions for you and your family that you may not have yet considered.