Earn up to 14% APY with DeFi on Hive

Decentralized Finance (DeFi) is one of the most promising sectors of crypto in 2020. Recently Compound announced that they have over 1 billion dollars locked up in their protocol. The majority of DeFi apps are run on the Ethereum blockchain, because it's smart contracts are perfect for this use case.

What many people don't know: There also DeFi apps on the Hive blockchain. At the moment of writing the only major DApp working is DLease. I want to talk about it in this post.

Earning interest with Hive and DLease

DLease is a straightforward to use app: You delegate your powered up (staked) HIVE to people that want to lend it out and they pay you every day with a rate that you agreed on before. Even if you are a beginner with the Hive Blockchain you probably won't have major troubles with using DLease. Those are the few steps that you need to do:

Go to https://hive.dlease.io/
Login using Hive Keychain or your preferred method
Go to the market page
Find a lease that suits you and click 'delegate'

It's as simple as that. Currently there are leases available with APYs ranging from 8% to 14%, but if you check the market every now and then you will find contracts with higher APYs. After you have delegated the HP you will receive a transfer from DLease confirming that your delegation was registered. You will now receive daily payments and can cancel the delegation after the contract completed.

Advantages of Hive DeFi

Due to the fact that Hive is a DPoS blockchain DLease has some key advantages over Ethereum based DeFi platforms.

No risk of smart contract being hacked

In the past there were many instaces of DeFi smart contracts being hacked. Even more established protocols, that seem to be secure, still have a risk of having flawed code that can be exploited. You don't have this risk when using DLease.

Because you never actually send away your funds, you can't lose them. Even if DLease, the platform gets hacked, you don't have the risk of losing your funds.

You never lose control over your funds

As mentioned above you never lose control over your funds when using Hive DeFi. On Ethereum you always have the risk that the smart contract that is being used, contains a coding error that could be exploited. On Hive you never actually send away your funds, you just delegate them. This means that your funds are accessible at all times.

No transaction fees and fast transaction

This is probably the biggest advantage that Hive apps have over Ethereum. You don't need to pay transaction fees. On Etheereum you can pay multiple dollars just to deposit your tokens to a smart contract or interact in another way with the contract, this is not needed on Hive. Additionally you have 3 second transactions and no long waiting times like on Ethereum.

Advantages of Ethereum DeFi

Of course there are also some things that are better on Ethereum. There are two points in my opinion that are relevant.

The first one is that you need to stake your HIVE to use DLease as a form of DeFi, something that you don't need to do on Eth. Your funds are powered up for 13 weeks and you only get one 13th of the staked HIVE in liquid form once every week for 13 weeks.

Complete decentralization on Ethereum

This one is the major advantage that Ethereum has over Hive. Due to the nature of smart contracts you don't need to trust anyone on Eth. DLease works not in a completely denetralized way. While you don't have a risk of losing your funds on Hive, theoretically DLease could stop working and thus you wouldn't get paid for your delegation.

The way DLease works is that the borrower pays his interest in advance. Then, once someone fills the lease DLease releases the paid interest daily. So the only failing point you have here is that DLease stops working and the borrower may lose his money, which is highly unlikely though.

DeFi on Hive as a viable alternative

When comparing DLease on Hive to other DeFi apps on Ethereum you can definitely say that Hive is an alternative for decentralized finance. While you don't have the complete decentralisation that is achieved through smart contracts, you have a much more flexible app where the risk of losing your funds is zero, not just virtually, but literally.

You also have to keep in mind that you are still earning staking rewards with Hive. Even when you have lend out your HP you are still earning staking rewards.

DLease has a different approach to DeFi than most of the other apps out there. But the approach is as good, if not even better, as DeFi apps on Ethereum.

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