One Of The Reasons Why Defi Is A Big Deal - Daily And Weekly Dividiends

Welcome to the new world of finance. You might have been seeing his term pop-up lately, defi. If you don't know the term defi is a short form of decentralised finance. Think of it the same as the word dapp, which means decentralised application. Apparently we like to take the word decentralised and mash it with other words. I guess we would be deblog or desocial. Or maybe deso. That might be the name of a new site, you heard it here first. Anyways defi is a big deal and there is a huge reason why it is a better way to do finance than traditional investments: daily dividends.

For those who invest maybe you get dividends quarterly or, if you are lucky, monthly. When you are trying to regrow your investment you take that money and you reinvest it into those same stocks that are paying dividends. This is called compound interest. But the problem is you are doing it too slowly when you do it quarterly or even monthly. The faster you can compound the faster your money grows and the higher your dividends will be. This means that if you are compounding daily instead of monthly than you are growing your money much faster and will have more money in your account at the end of the month even with the same dividend APR.

Compound interest is the way to build any type of wealth and not have to be stuck in some job you are unhappy with for the rest of your life (yeah I know the feeling). The reason it builds so fast is that when you compound you are taking the percentage of the new balance every day and getting your return on that. That means everyday you are earning higher and higher dividends even though your rate of return doesn't change. If you do quick math you can see how fast it adds up and will worlds ahead on your investment than if you only were paid out a few times a years

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This is the advantage of blockchain technology. Defi lets you get your dividends every week or every day and this is unheard of in the stock world. Not only that you can get your divs paid directly to your account automatically without a middle man and just reinvest it in seconds from your phone. There are also less or no fees and you as crypto can work in smaller numbers you can get paid even if your divs are not that high.

Sure we all hope our investments in crypto pay off and things moon but look at how long we have been going sideways in the bitcoin market. That is months of daily interest that could be reinvested daily to build up your bags while you wait for bitcoin to do something. It is a smarter way to invest than waiting and if bitcoin tanks (which it could any day now) then you can continue to pile up your sats while you wait for it to go back up.

Defi is a great way to get more out of your investments. I'm not telling anyone in what to invest in and like always, crypto is a VERY risky investment, but if you are going to hold a coin it makes sense to get daily dividends from it instead of watching it sit there and defi gives you that option. I do think banks will have to get into this model eventually as they are leaving a lot of money on the table as they wait for their divs to come in slowly.