Mark Cuban on the DeFi ecosystem and how he benefits from yield farming

• Mark Cuban says he entered the world of decentralized finance (DeFi) through yield farming.
• The billionaire says he is making a 206% return on one of his DeFi investments.
• Cuban also warned that many DeFi companies would eventually go out of business.

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Mark Cuban made most of his fortune by selling Broadcast.com to Yahoo! for $5.7 billion worth of stocks, just before the peak of the dot-com bubble. Now the billionaire owner of the Dallas Mavericks says he makes money another way — through yield farming.

Cuban has become a liquidity provider on decentralized finance (DeFi) exchanges, where he earns rewards for allowing users to swap between tokens. The “Shark Tank” star said he expects annual returns of over 200% in some cases using this tactic.

DeFi is an umbrella term that refers to blockchain-driven, decentralized financial applications that seek to encroach on territory held by traditional financial intermediaries such as banks.

Cuban detailed his move into DeFi in a new blog, highlighting the benefits of what he calls “a model for future tech companies and potentially all companies.”

Here are the billionaire's eight best quotes from the blog, lightly edited and condensed for clarity.

1. “In a currency exchange business or even a banking business, you need to have the financial depth to offer the range of currencies and services needed. “You have to be able to afford to hedge the risk of price volatility between currencies.” If you want to do this business on a large scale around the world, it can be very expensive and risky. Not for DeFi exchanges. What makes running a DeFi exchange so much better than a traditional centralized financial operation of this or any kind is rather this. In contrast to the company's owners, investors and their creditors putting up capital for all transactions to be carried out, Liquidity Providers (LPs ) this for them.”
2. “I’m a small LP [liquidity provider] for QuickSwap. I provide two different tokens (DAI/TITAN) that allow QuikSwap to offer swaps between these two tokens. As you can see here, this pair is one of many, and you can also see that based on the 0.25 percent of volume in this swap that Quickswap pays, my return on my initial investment of $75,000 ( based on fees only) as of this is an annual return of approximately 206%.”
3. “In exchange for providing the liquidity that both TITAN and Quickswap require for their trades, I receive 0.25 of the transaction volume for swaps between these two tokens. As long as I continue to get a good return, I will keep my money invested (volatility). may result in mark-to-market losses. If not, I can withdraw it immediately (some platforms have a hold period or penalties). I have enough LPs and the exchange is far more capital efficient than a similar traditional exchange business, and I can make some money!”
4. “Think about Dave & Buster’s tokens. When you buy their tokens, you can only use them in their arcades. You cannot use them in others. One of the basic businesses of DeFi is the ability to exchange the tokens of one project for those of another. That's why they call them stock exchanges. And when the exchange is decentralized, they call it…DEX.”
5. “Every business or financial software services or application company has cloud computing and operating costs that very often grow faster than their revenue. This is no surprise, because this is exactly why software companies raise significant amounts of capital to feed their “software.” The capital needs of companies like Polygon vary greatly. Why? Because instead of building their business solely on a cloud computing platform like AWS, their operations are decentralized. The foundation of decentralization is based on an independent party establishing its own capital to provide computing resources to support the network platform.”
6. “With any other company, you have to pony up a lot of money to host your own servers, or rather pay the cloud computing costs, which can be insanely expensive for compute-intensive applications and just as expensive to scale up to heavy usage applications. Also, you have to hire all the people, have the capex to support them, etc. In the decentralized crypto world, these third parties (minors, validators, etc.) in return provide the computing power that effectively runs the platform and rewards in that network's token.
7. “If Polygon or any of its competitors had followed a traditional, centralized business route where they controlled and owned everything, they would have had to raise not just millions, but potentially much, much more. Instead, they create a near-zero cost token that they distribute to their community according to the tokenomics they have defined.”
8. “That doesn’t mean every crypto blockchain or DeFi project will work. They won't. These facts are no secret in the crypto world. There is an incredible amount of competition. So much, actually many, if not.” Most won't work. You won't get enough users or generate enough fees to be successful. Crypto is brutally competitive. But when it comes to crypto versus traditional, centralized companies, all things being equal, I’ll take crypto every time.”

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