Previously, I made an introductory thread on how to earn Crypto passively even without trading.

Now here's the PART 2 & (step-by-step) guide showing you how to do that & how you can use decentralized exchanges to swap tokens

An educational thread #RETWEET for others to learn.🙂
The last time, I talked about how this functions on DeFi (Decentralized Finance) but I didn't show how, now here's DeFi in layman's terms.

Decentralized Finance simply means a system that grants you autonomy and total control over your money, that is all trans(actions) on your
funds are controlled by you, nothing can occur to your funds without your approval, you have full control over it.

While Centralized Finance (CeFi) a.k.a traditional finance means the opposite, an example of Centralized Finance is the traditional banks where you and I store our
money.

By going to the bank to store your money you hand over the authority and right over it to them.

They now have full custody & control over your money and that's why they can set rules on when to come in the hall and when not to come in (to access your own money), or place
limits on your account and determine what you do and what you don't do.

And before you store your money with them, you need to supply your details so they know about you (KnowYourCustomer/KYC).

This is a simple analogy of Centralized Finance, that is your financial actions
are with a central authority who holds your funds and place rules and restrictions on how you use them.

Decentralized Finance replicates this traditional banking system too but grants you autonomy over your funds in this case, there's no authority determining or limiting how you
transact.

You rarely need any form of registration to access the Decentralized Finance space.

I also explained how centralized Finance systems in crypto require "Centralized Exchanges (CEXes)" to function eg Binance, KuCoin, Gate, HotBit etc.

These exchanges are centralized
because they control and have authority over your Cryptocurrency assets the same way the banks have authority over your money stored with them.

DeFi works on Decentralized Exchanges or DApps (Decentralized Applications), and examples are Uniswap, Bakeryswap, Pancakeswap etc.
which I'll be showing you how to use in a moment.

Now let me explain Cryptocurrency Networks to you in a simple way.

You know for you to build any mobile application, you'll need a programming language to do so. E.g Python, Java, CSS etc.

The Twitter app we're both using now
was built using a programming language which runs on codes called "Ruby on Rails".

So in simple terms, Cryptocurrencies are built on the Blockchain system/network, and to easily understand, you can refer to Blockchain as the programming language of all Cryptocurrencies.
The first cryptocurrency which is #Bitcoin was built on the Blockchain technology, same with every other Cryptocurrencies.

But as Cryptocurrency progressed, some of these cryptocurrencies became foundations for other tokens.

DeFi allowed people to be able to build new projects
on some of these existing cryptocurrencies.

The first Crypto network that brought about DeFi is Ethereum, so Ethereum now serves as a Cryptocurrency (Ether), and also a network for the creation of other tokens and projects too.

I'll simplify this further for you to understand.
See Blockchain as a grandparent who gave birth to numerous CHILDREN - Bitcoin, Ethereum, Binance Coin, Tron, Solana, and other Cryptocurrencies.

And when the CHILDREN grew up, they also gave birth to other KIDS (tokens) - UNI, SUSHI, CAKE, BAKE, JULD, ONYX, KLV, COPE, ROPE etc.
So these CHILDREN are what we can call networks, though they are Cryptocurrencies too, but they also have rooms in them where new KIDS (projects or tokens) can be born (built).

Blockchain powers these Cryptocurrencies and their networks which in turn power these tokens.
And it is on these networks that we're able to conduct decentralized Finance transactions.

That is we can exchange our crypto, lend them, stake them and earn interests on them just like a fixed deposit, and borrow funds the same way we can in the traditional banking system.
Now to the main part, you know I said you can lend people your money or stake them to earn rewards the same way you can borrow people money online and earn interests on doing so.

Now let me highlight the main points in this.

I'll talk about two main ways by which you can earn
Crypto passively and they are:

- Yield Farming.
- Staking.

What is Yield Farming?

Yield farming simply means providing your Cryptocurrency assets to a decentralized exchange for it to grow more assets for you.

Just like planting maize, and expecting it to give you more maize.
So the process of planting maize can simply be called "Maize Yield Farming" because you planted maize and expect it to yield more maize for you.

That's a simple explanation for how yield farming on Crypto works too.

So yield farming simply means lending your Cryptocurrency
assets to a decentralized exchange, and earning interests for doing so through transaction fees gotten from those who conduct transactions on that decentralized exchange e.g Swaps.

And yield farming takes place in what we call a "Liquidity pool".

A Liquidity pool is simply a
farm where you plant your Cryptocurrency assets by giving people access to trade with it.

If you want to buy a Cryptocurrency, someone must be willing to sell, and if you want to sell, someone must be willing to buy, that's liquidity.

So you earn crypto by providing liquidity.
Liquidity simply means the ability to swap or convert an asset to cash without affecting the market price.

So relating this to crypto, it simply means the ability for you to easily Exchange your Crypto assets for another at the current market price without paying excess.
Let me cite an example.

If you go to the market and you want to buy a tuber of yam at a price of #1,000 and you see several people selling that item for that price, it simply means there's Liquidity for it because there is enough supply (availability), doesn't mean some sellers
won't add little amount on it to make profits, some may sell theirs for #1,010, some can add extra #15 to it for profit, but you know the general market price is around #1,000 though seller's rates differ (slightly).

This simply means there's liquidity in the market, that is
a free flow of transactions without much gap in price, this gap in price is what is called "slippage".

Let me explain slippage further.

Slippage is simply the movement in price from when you created an order to when the order was fulfilled.

Example: If you order for a bag
online at a price of #15,000 (including delivery fee), and you expect it to be delivered in a few days, and there's a news that fuel price has increased from #220/litre to #300/litre, and the customer rep calls to notify you that due to the fact that the price for fuel has spiked
you would now have to pay #15,240 for your order to be processed and delivered.

You'll most likely tell them to deduct the extra #240 from your card and complete the order because it's not that much.

This extra difference in the initial price you paid and price you got it is
what is referred to as slippage.

Now let's get back to earning with yield farming by providing Liquidity.

Before we get into this, I'll need to tell you about the disadvantage of this method.

Or wait. Do you really think this method is risk free?

Lol no, Crypto is risky.
There is a common disadvantage to providing liquidity, which is called "Impermanent Loss".

You really need to know this.

Now what is impermanent loss?.

Impermanent loss is simply when there's a change in price from when you made a deposit to a liquidity pool.
For you to provide liquidity, you'll need two coins to do so, you know I explained liquidity above as the process of exchanging assets easily without much influence in price.

And the ratio for you to do that must be the same, that is if you're providing Liquidity for two tokens
They need to have the same ratio eg. If you want to provide liquidity for Yam and Cassava so people will be able to buy both, and one tuber of yam is #1,000 and a tuber of Cassava is #200, for you to provide liquidity, you'll need to drop a tuber of yam and 5 tubers of cassavas
for the liquidity to come up.

That is 1 Yam = #1000
5 cassavas = #1,000

So the ratio for both is 50:50.

Now when the price of Cassava rises to #250/tuber, you'll suffer a #50 x 5 = #200 loss on your liquidity position, and when you see this, you would've wished you just held
your yam and your cassava at home instead of lending it.

This is the same case with lending crypto assets, but a positive aspect to this is that the fees (interests) you earn from those swaps can offset those losses so providing liquidity can still be profitable even if there's
volatility.

So you have to weigh your options, and that's why it's always said to NEVER invest or trade with any amount you're not comfortable losing.

And when you provide liquidity, you have to get a Liquidity provider token (LP token).

You LP token simply means a membership
card that shows you have a part in a liquidity pool. The quantity of your LP tokens are proportional to the amount of liquidity you provide.

Now like I said, if you're providing liquidity for Yam and Cassava, the LP token for this can be called 'YaSava LP" or Yam-Cassava LP
which is a mixture of the two different assets, anyone who sees you have a "YaSava" LP would know that you are a Liquidity provider for "Yam and Cassava".

So the amount of this LP token is what will determine the amount of profits you make.

Now let's go practical... Shall we?🙂
Let's say I want to farm #BNB and $CAKE with $100, that means I'll have to divide them equally, that is I'll have to add $50 worth of #BNB and $50 worth of $CAKE to have a 50:50 ratio for the liquidity pool.

Now let's get to it.
This will also show you how to swap on pancakeswap
We'll be using Trust Wallet for this.

- Firstly go to your Binance app and get #BNB worth about $102 (extra $2 for fees), that's 0.152 BNB.

- Copy your Smart Chain wallet address from Trust Wallet and withdraw the #BNB to it through the BSC/BEP20 network. #BSC means Smart Chain
I've sent my #BNB from Binance to Trust wallet and I've gotten it, took less than 3 minutes.
- I also want you to know that you can use the inbuilt DEX on trust wallet to swap like the image in frame 3, just select the tokens you want to swap, but let's use pancakeswap instead.
- Click on the DApps/browser section, if you use an iPhone you may not have it enabled yet, so open your Safari browser and enter "trust://browser_enable" in the URL bar, you'll be redirected to Trust Wallet and have it enabled.
- Here you'll see several decentralized apps/DApps.
These DApps grant you access to the decentralized world.

- Enter Pancakeswap.finance in the URL bar and go.
- The page would load using the Ethereum main network/mainnet, once it loads click on the circled Ethereum logo for a dropdown.
- Change the network to BSC/Smart Chain
at the top right corner for Android & top left for iPhone, the page would reload now using the #BSC MAINNETwork (the logo changes to Smart Chain like in frame 1).

- Click connect.
- Select Trust Wallet.
- Your wallet would be connected and the address would show at that side.
You now have access to the Pancakeswap Decentralized Exchange, you see how easy that was, there was no need for sign up or verification or captcha.

Now let's move to Swapping on Pancakeswap.

This is what most of you have always wanted to know.😊
On the top left corner, click on the circled menu.
- Click Trade.
- Click Exchange.
- Your #BNB balance will show up which is the main token for swapping on pancakeswap, if you have any other BEP20 token, you can use that, but let's use BNB.
- In the green circle search for the
token you want to swap to, in this case we're using $CAKE.
- Select it and the interface would look like that in frame 2.
- Input the amount of $BNB you want to swap to $CAKE in the "FROM" section.

Remember we want to use 0.152 for the farming right? And it has to be 50:50, so
what we'll do is divide it into two.

0.152 ÷ 2 = 0.076 BNB.

So we'll swap 0.076 #BNB to $CAKE and we'll type that in the input box.

You can see 0.076 #BNB will get us 1.2204 $CAKE as stated by the DApp.
And you can also see the Liquidity provider fee, that's the fee that will
be deducted from us, and that fee goes to the BNB-CAKE liquidity providers (LPers), that is those who are farming BNB and CAKE, and now we want to join that group of farmers so we can also earn fees on every BNB<>CAKE swap.

- Click on Swap.

You see this popup I just got that
says price updated? That is what we call "SLIPPAGE", that is there was a movement in the price of either of the tokens I want to transact.

- Click Accept. (just the same way you accepted the extra #240 the online customer rep charged you due to a movement in fuel price above🙂)
- Confirm Swap.
- Confirm Transaction on Trust Wallet.

See that transaction fee? That's what goes to the Liquidity providers, and that's a reason I suggested we added an extra $2 for transaction fees.

- Approve

This will take you back to the DEX and show Transaction Submitted.
You'll see a confirmation message above and the swapped tokens would be delivered to your wallet after a few seconds.

We've now successfully swapped a token on Pancakeswap.

Now let's get to other methods of using pancakeswap, not all tokens are available via the search option.
Some tokens require manual input for transaction. For instance if I want to buy Poocoin like I mentioned here
and I search for it on pancakeswap, it won't show up. So what I'll need to do is get the "Contract Address"/"CA".

A Contract Address is simply an
address for identifying a token on a decentralized exchange.

Every token has their own address, see it as an ID card that states the name of a project and what it's about.

So if I search for "Poocoin" here on Pancakeswap I won't see it there because it's not a primary BSC token
like the ones listed in the options.

But for me to get it I'll need the contract address. I posted the contract address below the tweet I quoted above and here it is.


So what you'll do is long press the contract address to copy it, them paste it in the
input box just like I did here, it'll show up and then you'll click on add, and press it again to show up on the swap interface.

Then you can now proceed to buy with any amount of $BNB you want to use just like how we conducted a transaction above.

I hope you understand this.🙂
Now let's go back to the Liquidity provision in Farming.

On the interface, click on liquidity.
- Add liquidity
- Select the pair you want to add, in this case we chose $BNB-CAKE pair.
- Click Max, the interface will pair the $CAKE to BNB equivalent automatically.
- Approve $CAKE
- Approve again in your TW app.
- Then click Supply.

You can see the notification that says we'll get 0.295 BAKE/CAKE LP tokens, that's our share in the Liquidity pool.

- Approve transaction in your wallet.

Now you can see we now have our BNB-CAKE LP tokens.
We've now successfully completed a yield farming operation, that is we've planted our $BNB & $CAKE in the farm to earn us more money.

But note like I said, this method carries a form of risk due to volatility, so don't go in with what you can't afford to lose & leave for long.
Now let's get to Staking.

Staking is much more easier and also risky like Yield Farming due to volatility, and it is also a type of farming.

Yield Farming is a form of Staking too but it is plural (dual), that is it requires two tokens to do so.

Staking is singular,
that is you stake a single token to earn more of the same tokens.

Analogy.

Yield Farming = Yam-Cassava (BNB-CAKE).
Staking = Planting Maize to produce more Maize.

You can call Staking an upgraded form of "Mining", staking helps a network grow.

Now let's go practical on this.
Note that LP tokens are staked in "Farms" while Singular stakes eg only $CAKE are staked in "Syrup Pools".

Now let's stake our LP token (BNB-CAKE LP).

- Click on the menu at the top left & click Trade > Farms.

You'll see a list of available LPs to be staked with their APRs.
APR means "Annual Percentage Rate", you can call it the percentage of your stake that would be returned to you at the end of a year.
So let's go for CAKE-BNB stake since that's the LP we have.

- Enable it and approve in your wallet.
- Stake LP.
- Click Max and confirm.
Now we've staked our BNB-CAKE LP and we can harvest it whenever we want to.

This is for staking of the LP, now let's proceed to the other main staking which is done in a Syrup Pool.

Remember I said the syrup pool needs a single token to stake, and we'll be staking cake in this.
Also remember that we've converted all our available CAKE for the LP token.

Now let's go back and Swap part of the remaining BNB I have to $CAKE so we can stake it in the Syrup Pool.
I just converted part of my $BNB to $CAKE worth about $15.

- Go to the menu.
- Click pools.

The first one here is "Auto CAKE", which means the rewards earned from this stake automatically gets reinvested to the pool which earns you more $CAKE.

- Click Enable and approve.
- Click on Stake and input the amount of $CAKE you want to stake, I chose max.

Now you'll see the approval message in frame 2.

The APY I circled means Annual Percentage Yield, it's different from APY in Yield Farming which means Annual Percentage Rate because APR is fixed while
APY is compunded, that is you get automatically compunded returns on APYs compared to fixed returns on APRs.

Now we've successfully staked our $CAKE on Pancakeswap and we can earn more of it.

Note like I said, this is risky too!
Now if you want to stake more $CAKEs or unstake your $CAKEs from the pool, go to the same page and click the minus sign to unstake and get it back in your wallet or click the plus sign to stake More to the pool.

Now if I want to unstake, there's a fee for it which is 0.1%

Easy.
The same process is applied if you want to un-stake your LP tokens from the Farm.

I just un-staked part of my LP tokens from the Farm.

- Go back to the Liquidity section and approve the Liquidity removal, I chose max this case.

Then your tokens would be returned to your wallet
Now we just un-staked our LP tokens from the farm, and removed our tokens from the Liquidity pool and now they're back in our wallets.

If you want more secure stakes with less impermanent losses you can stake stablecoins.

Stablecoins are simply coins that are built to be immune
to volatility. That is their value doesn't change and are pegged to tangible assets, most stablecoins are pegged to the US Dollar that is their value is equivalent to that of the US dollar and examples of these Stablecoins are; $USDT, $USDC, $BUSD, $TUSD, $DAI, $VAI, $FEI etc.
1 USDT = $1
1 USDC = $1
1 BUSD = $1
1 TUSD = $1
1 DAI = $1 etc

You can stake these tokens as they're rarely volatile due to backing by solid assets & reserves.

The smallest of these APRs is 13% which is way better than the 3% you get from the banqs (coupled with inflation)🙃
Also note that Pancakeswap isn't the only Decentralized Exchange, it's just the one I chose for this tutorial, we also have Uniswap.org, Bakeryswap.org, Julswap.com, 1inch.io, Sushi.com, Yearn.finance and you
can access these DEXes through Trust Wallet or Metamask and conduct your transactions on the DeFi space.

Some tokens are available on Pancakeswap but not on Julswap or bakeryswap, etc.
So if anyone drops a CA (Contract Address) for a token, ask them what DEX to use for purchase.
And this is the entire process for earning passively in crypto through Yield farming and Staking on a Decentralized Exchange like Pancakeswap.

I hope you gained value in this, kindly share what you gained in the comments below and tag your friends to learn too.🙂
This is the beginning of the thread, kindly retweet for others to see and learn from.

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4 May
Having Bitcoin or Ethereum as a newbie isn't bad, but there are quite a lot of other coins that could give you a faster growth.

Eg Buying Bitcoin with 300k at a price of $54k now means it has to get to $108k before you get X2 of 300k.

I'll explain further.
A thread, #RETWEET 🙂
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#Retweet for others to see.
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