How to Earn Passive Rewards in Web3 with Staking, Lending, and DeFi

Key Takeaways

• Web3 DeFi allows users to earn passive rewards through staking, liquidity provision, lending, and yield farming while maintaining full control over their assets.
• Staking in Web3 secures blockchain networks and generates staking rewards, with options like native staking for security and liquid staking for flexibility.
• Advanced DeFi strategies like yield farming, auto-compounding, and lending offer high-yield opportunities but come with risks such as impermanent loss and market volatility.

With Tonstakers, you can easily participate in Web3 DeFi and start earning passive rewards through staking, liquidity provision, and yield farming—no prior blockchain experience needed. Let your TON work for you with liquid staking and maximize your returns.

How to Earn Passive Rewards in Web3?

Decentralized Finance (DeFi) has transformed how individuals can earn passive rewards in Web3. Unlike traditional banking systems that require intermediaries, Web3 DeFi leverages blockchain technology to allow users to earn rewards directly through staking, liquidity provision, lending, and more advanced strategies like yield farming and auto-compounding. These decentralized earning methods provide users with higher returns, enhanced transparency, and financial autonomy compared to traditional finance.

The ability to generate Web3 passive income without relying on centralized entities is one of the most significant benefits of the Web3 ecosystem. Whether you are a long-term investor looking for staking rewards or a DeFi enthusiast seeking high-yield strategies, the Web3 ecosystem offers multiple options to optimize earnings while maintaining control over digital assets.

What is Staking and Why Is It Important in Blockchain?

Staking in Web3 is a fundamental component of Proof-of-Stake (PoS) blockchains, where users lock their tokens to help validate transactions and secure the network. In return, they receive staking rewards in the form of additional tokens. This process incentivizes participation while contributing to the security and efficiency of the blockchain network. It’s a greener alternative to the energy-intensive Proof-of-Work (PoW) consensus used by Bitcoin.

As of 2024, more than $150 billion worth of crypto assets are staked across PoS networks. Ethereum, which transitioned to PoS in 2022 via the Merge, now has over 30 million ETH staked. TON, Solana, Cosmos, and Avalanche are among other prominent networks leveraging PoS for scalability and efficiency.

Native Staking vs. Liquid Staking

Native Staking requires users to lock their tokens for a fixed period, during which those assets are inaccessible. While this method is secure and straightforward, it lacks flexibility—users cannot use or move their staked assets until the lock-up period ends. This limitation has historically deterred smaller users from participating in staking.

Liquid Staking, on the other hand, allows users to stake tokens and receive a representative token called a liquid staking token (LST). These LSTs, such as tsTON from Tonstakers or stETH from Lido, retain the value of the staked asset and continue to accrue rewards. The key advantage is that LSTs remain usable within decentralized finance (DeFi) applications, enabling users to earn yield on top of staking rewards.

For example, a user who stakes TON with Tonstakers receives tsTON. That tsTON can then be deposited into liquidity pools, used as collateral, or traded—all while still earning staking rewards from the underlying TON. This dual utility significantly increases capital efficiency and enables broader participation in DeFi.

Liquid Staking Protocol Examples

Nearly every major PoS blockchain now supports a liquid staking protocol, underscoring its critical role in making staking more accessible and versatile:

• Tonstakers (tsTON): The leading liquid staking platform on the TON blockchain. Users stake Toncoin (TON) and receive tsTON, which can be deployed across DeFi protocols like STON.fi and DeDust. With over $260 million in TVL, Tonstakers dominates TON's liquid staking ecosystem.
• Lido (stETH): The largest liquid staking platform for Ethereum. It manages over $20 billion in staked ETH and distributes stETH to users, enabling them to interact with dozens of DeFi platforms including Curve, Aave, and Balancer.
• Jito (JitoSOL): A liquid staking protocol on Solana, Jito issues JitoSOL to stakers, unlocking further DeFi opportunities on Solana-based platforms while securing the network.

Liquid staking has rapidly become one of the most popular DeFi primitives, unlocking passive income and enabling composability across decentralized ecosystems. As new protocols launch and integrate with dApps, the utility and demand for LSTs continue to grow.

DeFi Liquidity Mining

Liquidity mining is one of the foundational pillars of decentralized finance (DeFi). It enables token swaps, powers decentralized exchanges (DEXs), and creates passive income opportunities for users who contribute capital to on-chain liquidity pools. As DeFi continues to expand across multiple blockchains, liquidity providers (LPs) play a critical role in keeping decentralized markets functional and efficient.

What Is Liquidity Mining?

Liquidity providers deposit pairs of tokens into smart contract-based liquidity pools on DEXs. These pools serve as the backbone of automated market makers (AMMs), which facilitate trades without the need for centralized intermediaries or traditional order books. When users swap tokens on a DEX, the liquidity in these pools ensures that trades can be executed instantly at algorithmically determined prices.

In return for contributing liquidity, LPs earn a share of the transaction fees generated by users who trade against their pool. Depending on the platform, LPs may also receive additional rewards through native tokens or incentive programs. This system allows LPs to earn yield on their idle assets while supporting a decentralized financial infrastructure. Also, liquidity providers may lock their LP-receipts in special contracts to receive additional rewards. This is called liquidity mining.

Risks: Impermanent Loss

While liquidity provision offers attractive returns, it is not without risk. The most well-known risk is impermanent loss, which occurs when the price of tokens in the pool diverges significantly from the time they were deposited. For example, if one token in a pool increases in value while the other remains stable or falls, the pool’s algorithm will rebalance the holdings, often resulting in the LP ending up with more of the less valuable token.

This effect can reduce the total value of an LP's assets compared to simply holding the tokens outside the pool. However, in high-volume pools, trading fees may offset impermanent loss. Additionally, protocols often introduce incentives such as yield farming to attract liquidity and mitigate this risk.

Real-World Examples of Liquidity Mining

• Uniswap (Ethereum): Launched in 2018, Uniswap is the most widely used DEX and has processed over $1 trillion in cumulative trading volume. It allows users to supply liquidity to thousands of token pairs and earn 0.3% in trading fees per swap, distributed proportionally to LPs in each pool.
• STON.fi (TON): As the premier DEX on the TON blockchain, STON.fi allows users to contribute liquidity in TON-based asset pairs. LPs benefit from transaction fees and incentives specific to the TON ecosystem, contributing to the network’s growing DeFi infrastructure.
• Curve (Ethereum & Avalanche): Curve specializes in stablecoin and like-valued asset pools, such as USDC/USDT or ETH/stETH. These pools experience minimal price divergence, which significantly reduces impermanent loss. Curve is ideal for conservative LPs seeking stable yields with lower risk exposure.

DeFi Lending and Borrowing: Unlocking Capital in Web3

Decentralized finance (DeFi) is transforming how people access financial services, and one of its most impactful innovations is the ability to lend and borrow assets directly on the blockchain. By removing intermediaries and replacing them with smart contracts, DeFi lending protocols make it possible for anyone to earn passive income or access liquidity in a transparent, trustless manner.

How DeFi Lending and Borrowing Works

DeFi lending platforms allow users to deposit cryptocurrencies into a lending pool. These deposits are then made available for others to borrow. In exchange for providing liquidity, lenders earn interest, which is automatically calculated and distributed by smart contracts.
Borrowers, on the other hand, provide collateral in the form of crypto assets to secure a loan. The platform issues loans based on a loan-to-value (LTV) ratio, which defines how much a user can borrow against their collateral. If the collateral value drops below a threshold due to market volatility, the position may be liquidated to protect the protocol from losses.
This system ensures that funds are always backed by more value than is being lent out, keeping the ecosystem stable without requiring credit scores or banking intermediaries.

Benefits and Risks

The advantages of DeFi lending are compelling:

• Passive Income: Users can earn attractive yields simply by depositing idle crypto assets.
• Capital Efficiency: Borrowers retain ownership of their collateral while accessing liquidity.
• Permissionless Access: Anyone with a wallet can participate without needing approval.
• Transparency and Automation: Smart contracts ensure all lending and borrowing activity is transparent and governed by code.

However, there are also important risks:

• Market Volatility: Sudden drops in collateral value can lead to liquidations.
• Smart Contract Risks: Vulnerabilities in protocol code can lead to exploits and fund losses.
• Interest Rate Fluctuations: Returns are not fixed and can vary significantly with supply and demand.

Users must assess these risks and employ strategies such as over-collateralization, diversification, and protocol research to safeguard their capital.

Leading DeFi Lending Platforms

• Aave (Ethereum & Polygon): With over $10 billion in Total Value Locked (TVL), Aave is one of the largest and most trusted DeFi lending protocols. It supports a wide variety of assets, offers variable and stable interest rates, and features innovative tools like flash loans and delegated borrowing.
• EVAA (TON): EVAA is a decentralized lending platform built on The Open Network (TON). It provides users with the ability to lend TON-based assets or borrow against them, all while earning competitive interest rates. As the TON ecosystem grows, EVAA is becoming a key pillar of its DeFi infrastructure.
• Solend (Solana): As the leading lending protocol on Solana, Solend offers high-speed, low-fee lending and borrowing options. Users can supply assets, earn interest, and access instant loans with near-zero transaction costs thanks to Solana's high throughput.

The Future of Lending in Web3

DeFi lending is reshaping how users think about capital access, savings, and financial empowerment. As new protocols emerge across various blockchain ecosystems, and as smart contract security improves, DeFi lending is poised to become a cornerstone of the global financial system.
Whether you're a long-term holder seeking passive yield or a trader looking for capital efficiency, DeFi lending provides powerful tools that are open, borderless, and aligned with the principles of Web3.

Yield Farming in Web3: Maximizing Rewards Through DeFi Strategies

Yield farming, sometimes referred to as liquidity mining, is one of the most dynamic and rewarding strategies in the world of decentralized finance (DeFi). While staking is a relatively passive approach to earning rewards, yield farming involves actively allocating crypto assets across different protocols to optimize returns. It’s a strategy for users who are comfortable navigating DeFi ecosystems and are looking to make the most of their capital through compounding incentives and flexible participation.

What is Yield Farming?

In simple terms, yield farming is the practice of using crypto assets to generate the highest possible yield across multiple DeFi protocols. Users typically supply liquidity to pools, lend assets, or participate in protocol-specific incentive programs that distribute rewards in native or governance tokens. Unlike staking, which offers a relatively fixed yield for a set commitment, yield farming is more complex and dynamic, often involving multiple layers of reward mechanisms.
For example, a user might provide liquidity to a decentralized exchange (DEX), earning transaction fees. Simultaneously, they may stake their liquidity pool (LP) tokens in another protocol that offers additional rewards, such as governance tokens or boosted interest rates. Yield farmers are constantly evaluating these opportunities and shifting funds to maximize their return on investment.

Farming vs. Staking

While staking and farming are both used to earn passive income in crypto, they operate differently:

• Staking locks assets directly into a blockchain network (e.g., Ethereum, TON) to help validate transactions. Rewards are generally predictable and fixed.
• Yield Farming involves deploying assets into DeFi protocols that incentivize liquidity provision or lending. Rewards come from multiple sources: trading fees, governance token emissions, and special farming incentives.

Yield farming demands more effort and understanding of DeFi mechanics, but it often delivers higher returns than simple staking, especially during times of strong protocol growth or token incentive programs.

Examples of Multi-Layered Yield Strategies

• Convex Finance (Ethereum): Built on top of Curve Finance, Convex allows liquidity providers to boost their rewards by aggregating CRV tokens and redistributing them more efficiently. With over $3 billion in total value locked (TVL), Convex has become a central tool in Ethereum’s yield farming ecosystem.
• Raydium (Solana): A high-performance AMM and liquidity provider that integrates directly with Serum's order book. Raydium offers farming pools where users earn yield through trading fees and token emissions, making it a top DeFi destination on Solana.
• Tonstakers Earn (TON): Expanding the utility of liquid staking tokens, Tonstakers Earn offers users the opportunity to provide tsTON to liquidity pools on platforms like STON.fi and DeDust. Participants earn additional incentives, including USDT and TON rewards, and benefit from high-volume trading activity across the TON ecosystem.

Risks and Considerations

Yield farming, while lucrative, comes with its own set of risks:

• Smart Contract Risk: Interacting with multiple DeFi protocols increases exposure to potential vulnerabilities in the code.
• Impermanent Loss: Providing liquidity to volatile token pairs may result in reduced value when withdrawing funds.
• Volatility of Rewards: Token prices and reward rates can fluctuate significantly, impacting profitability.

As a result, successful yield farmers carefully research each protocol, assess market conditions, and often diversify across platforms to mitigate risk.

Final Thoughts

Yield farming is a powerful tool for experienced DeFi users seeking to maximize capital efficiency and return on investment. As the Web3 ecosystem matures, yield farming strategies will continue to evolve, incorporating more advanced tools like auto-compounding, protocol aggregators, and cross-chain integrations.

By leveraging the right platforms and strategies, users can turn passive assets into productive capital, playing an active role in the future of decentralized finance.