How to Invest in DeFi

Decentralized finance, or DeFi, has reshaped how we earn yield, trade assets, and access credit without relying on traditional banks. Investors can now tap into protocols that facilitate peer-to-peer token swaps, collateralize loans, or stake their holdings. As DeFi matures, opportunities extend beyond cryptocurrencies into infrastructure, stocks, and venture investments.

This guide outlines key entry points, showcases notable projects, and highlights risks and rewards.

Key Takeaways:

• DeFi investments can be made through token sales, providing liquidity through DEXs, staking, lending, infrastructure protocols, participating in equity rounds, trading derivatives, ETFs, tokenized assets, and directly funding related projects.
• Leading protocols like Uniswap, Aave, Chainlink, Lido, The Graph, Injective, Hyperliquid, and Little Pepe combine strong ecosystem adoption with features like fee-generation, governance influence, and composability.
• The DeFi space remains growing in 2025 with the ongoing ecosystem expansion via Layer 2s, real-world asset tokenization, and AI integrations.

What is DeFi and How Does it Work?

DeFi is abbreviation for Decentralized Finance and refers to a suite of financial services built on blockchain networks using smart contracts instead of intermediaries. Users interact directly with protocols to lend, borrow, trade, and stake assets. These platforms operate transparently on decentralized ledgers, ensuring that operations follow coded rules rather than relying on human discretion.

In decentralized finance, funds flow through liquidity pools, automated market makers, and yield protocols that distribute returns according to predefined algorithms. The result is a 24/7 financial system accessible globally and permissionlessly.

7 Ways to Invest in Decentralized Finance

Investing in DeFi provides various avenues for engaging with blockchain finance beyond mere cryptocurrency speculation. Each strategy taps into different layers of decentralized ecosystems, ranging from tokens to infrastructure and financial instruments.

Buy DeFi Tokens

You can acquire these tokens via decentralized or centralized exchanges. Once purchased, DeFi tokens offer potential upside through protocol growth and governance rights. As protocol adoption grows, demand for these tokens typically increases, potentially driving their market value higher. Token holdings also grant voting rights over upgrades, fees, and strategic shifts.

Provide Liquidity on DEXs

Depositing a token pair into a DEX pool will make you a liquidity provider (LP), which is represented by LP tokens. Your share then earns a portion of swap fees based on trading volume and pool size. You can also trade LP tokens, which you can use to stake in yield farms or collateral.

Stake or Lend Assets

DeFi staking and lending let you earn passive income by locking assets in protocols that maintain network security or liquidity. These strategies typically offer yields far above traditional savings accounts, thanks to smart contracts automating rewards and interest distribution. They also allow you to keep ownership of your crypto while generating steady returns.

Lending in DeFi typically involves stablecoins which function as a dependable medium for deploying capital. Aside from lending, stablecoins are used in liquidity provision and yield earning.

Invest in DeFi Infrastructure

Backing DeFi infrastructure means investing in the underlying technology that powers blockchain ecosystems, such as data indexing, cross-chain connectivity, and robust security. Infrastructure tokens earn rewards and fees directly tied to actual usage, not speculation, providing yield grounded in real-world demand. As more developers build on these platforms, network effects strengthen, fueling token appreciation with increasing adoption. Plus, holders benefit from multiple value streams such as staking income, governance voting power, and revenue from consumed services.

Venture Funding and Equity

Venture funding and equity in DeFi let you participate in the sector’s growth by backing early-stage startups or publicly traded firms focused on decentralized finance. These investments offer upside from innovation and lets you share in future revenues, rather than mere token speculation. Public companies, such as DeFi Technologies, bridge traditional finance and DeFi through the issuance of bank-backed stablecoins and tokenized assets. This demonstrates how venture-backed DeFi firms can evolve into regulated financial players.

Trade Derivatives and Structured Products

Trading derivatives and structured products in DeFi appeals to sophisticated investors because these instruments offer both speculative upside and hedging capabilities. Perpetual futures, which have no expiration date, allow traders to leverage positions indefinitely and benefit from funding rate mechanisms that keep contract prices aligned with spot values. Oracle-free options protocols like Panoptic automate options creation using liquidity movement instead of price feeds. They reduce dependency on external data and enable seamless, permissionless options trading.

Invest via ETFs or Tokenized Assets

Exchange Traded Fund (ETF) and Tokenized asset investments are composed of diversified baskets of DeFi protocol tokens and real-world assets. This set-up balances risk and simplifies portfolio management. They enable fractional ownership and round-the-clock trading, improving liquidity and reducing barriers to entry. ETFs and tokenized assets give investors practical DeFi access through diversified, legally structured, and efficient portfolios.

Invest Directly to DeFi projects

Directly funding early-stage DeFi projects enables you to fuel innovation and capture value as the protocol grows. You may do this through private token sales, token warrants, or Reg D/STO equity rounds. As usage increases, these early stakes can appreciate significantly, reflecting real adoption and long-term network utility.

You can also participate in token sales, public or private. By supporting credible teams and sound tokenomics, you benefit from increases in protocol adoption, user activity, and token value. Direct token purchases also offer flexibility as you can monitor performance before deciding, adjust allocation based on new developments, and trade as ecosystems evolve.

If you’re looking to fund DeFi projects or buy DeFi tokens, you can check Acquire.Fi’s listings.

DeFi Projects to Invest In

Choosing the right DeFi projects to invest in means identifying protocols with real utility, strong adoption, and proven resilience. The most promising options combine network activity, token incentives, and indispensable roles in the DeFi stack. Here are a few standout projects worth considering in 2025:

Uniswap (UNI)

Uniswap is one of the largest decentralized exchanges by trading volume, boasting billions in daily liquidity. As a pioneer in automated market making, it generates consistent fee income for liquidity providers and offers governance participation to UNI holders. Its position as core DeFi infrastructure makes UNI a long-term bet on decentralized trading.

Aave (AAVE)

Aave is a market leader in decentralized lending, deployed across Ethereum and several Layer 2 networks. Its non-custodial model enables borrowers to access liquidity and lenders to earn yield securely. AAVE token holders can stake for safety module rewards and participate in protocol governance, adding multiple value layers.

Chainlink (LINK)

Chainlink provides decentralized oracles critical for price feeds, DeFi smart contract execution, and real-world data integration. Its deep integration with hundreds of protocols secures billions in assets, making LINK a vital asset across DeFi ecosystems. Holding LINK is a strategic position in the data infrastructure layer of Web3 finance.

Lido Staked ETH (stETH)

stETH allows users to earn Ethereum staking rewards without locking their tokens. It represents a liquid staking model where the token tracks the value of staked ETH while enabling its use across DeFi. This dual utility of yield and liquidity makes stETH an efficient asset for compounding returns.

The Graph (GRT)

The Graph powers data indexing and retrieval for dApps, especially in DeFi and AI applications. It underpins the functionality of hundreds of protocols by delivering decentralized APIs. GRT tokens are used for staking and querying services, tying their value directly to protocol usage.

Injective (INJ)

Injective is a high-performance Layer 1 tailored for DeFi trading, offering near-zero gas fees and native support for complex financial products. Its interoperability and institutional interest give it a strong foundation. The INJ token captures value through trading fees, staking, and governance rights.

Hyperliquid (HYPE)

Hyperliquid is a fast-emerging Layer 1 with a focus on perpetual futures and low-latency trading. Its strong year-to-date performance reflects growing trader adoption and high execution efficiency. HYPE could be an early-mover advantage in the DeFi derivatives space.

Risks of DeFi Investing

DeFi offers high returns but comes with its own risks. These include technical vulnerabilities, unpredictable markets, regulatory changes, and fraudulent schemes. Understanding each risk helps you safeguard your investments effectively.

• Smart Contract Flaws: Coding errors or vulnerabilities like reentrancy, logic, or access-control flaws have led to losses exceeding $1 billion in various exploits.
• Impermanent Loss: When the relative prices of token pairs diverge while providing liquidity, you may end up with less value than simply holding the tokens.
• Regulatory Developments: Evolving laws and pending bills in the U.S. (e.g., CLARITY Act, GENIUS Act) could impose new restrictions or reporting requirements on DeFi operations.
• Market Volatility: DeFi assets often experience extreme price swings, amplifying liquidation risk and impacting yields unexpectedly.
• Rug Pulls and Scams: Rug pulls from unaudited or anonymous projects defrauded millions. It accounts for a third of all crypto scam revenue and traps over 300,000 scam tokens.
• Liquidity Constraints: Low-volume tokens may leave you unable to exit positions without huge price impact, especially during large liquidations.

Why Invest in DeFi Projects?

DeFi still presents compelling potential in 2025 thanks to accelerating adoption, innovation, and economic shifts. The global DeFi tech market sits near $97 billion in 2025 and is projected to grow at 28 % annually through 2035. Protocols like Ethereum, Solana, and emerging Layer 2s continue to expand their reach; many feature staking incentives and yield-based models. If you’re seeking high-growth exposure and financial innovation, decentralized finance investing remains a strong strategic option as it offers diverse entry points. Keep in mind to align your risk tolerance with careful research, audits, and strategy. While big wins are possible, focus on sustainability and regulatory developments in 2025.

Frequently Asked Questions

What makes DeFi different from traditional finance?

DeFi replaces centralized intermediaries like banks and brokerages with automated smart contracts on blockchains to offer financial services 24/7. Traditional finance relies on centralized institutions that have limited operating hours, and strict regulations, while DeFi fuels faster innovation, lower friction, and global accessibility.

What is the difference between cryptocurrency and DeFi?

Cryptocurrency is a digital asset or payment token, while DeFi refers to the ecosystem of financial services built using these digital assets, such as lending, trading, staking, and derivatives.