As Ethereum continues to mature, staking has become one of the most common ways to earn passive income from holding ETH.

But staking is far from the only option. The rapidly evolving world of decentralized finance (DeFi) offers a growing number of strategies for Ethereum holders looking to earn yield — often with higher risk but also with potentially higher rewards.

While staking involves locking up your ETH to help secure the network and earn validator rewards, yield farming opens the door to a more dynamic set of opportunities. Yield farming refers to the practice of providing liquidity to decentralized protocols in exchange for incentives. These incentives can be interest payments, governance tokens, or other forms of rewards depending on the protocol’s mechanics.

One of the primary DeFi strategies to earn income on Ethereum is by providing liquidity to decentralized exchanges (DEXs). Platforms like Uniswap and Balancer allow users to contribute ETH and other assets into liquidity pools. In return, participants earn a portion of the trading fees generated on those pairs. If the pool is active and has sufficient trading volume, the earnings can be substantial. However, there is a risk of impermanent loss, where the value of the tokens you deposited fluctuates relative to each other, potentially reducing your overall yield.

Another method involves lending ETH through decentralized lending protocols like Aave or Compound. Here, users deposit ETH as collateral and earn interest as other users borrow those funds. The interest rates vary depending on market demand, but the advantage of this method is that you typically retain access to your funds and can withdraw or reposition them as needed. Some platforms even allow for over-collateralized borrowing, where you can borrow stablecoins against your ETH, then reinvest those assets for additional returns — a strategy known as leveraged yield farming. Of course, this amplifies both the potential gains and the risks, especially in volatile markets.

More advanced users might explore Ethereum-based structured products, such as vaults on Yearn Finance or automated strategies on platforms like Instadapp or DeFi Saver. These tools bundle several DeFi actions into a single strategy, often optimized to maximize returns. For example, a vault might automatically move funds between lending protocols to take advantage of the best interest rates, or it might auto-compound rewards for better efficiency.

Beyond DeFi protocols, some centralized platforms also offer ETH yield options. These often involve custodial arrangements, meaning you trust a third party with your assets. Examples include crypto exchanges or fintech apps that pool user funds and allocate them across various yield-generating strategies. While often easier to use and requiring less technical expertise, these platforms remove a layer of control and carry counterparty risk.

Another emerging area is real-world asset (RWA) tokenization on Ethereum. Some projects now allow users to earn yield by investing ETH in tokenized assets such as real estate, bonds, or even invoice financing. These assets are represented on-chain and offer returns based on traditional financial mechanisms. This is still a relatively new space, but it shows the potential for Ethereum to act as a bridge between decentralized and traditional finance.

Risk management is a critical part of any yield-generating activity. Users should be aware of smart contract risks, platform risks, and market volatility. Audits, insurance protocols like Nexus Mutual, and diversification strategies can help mitigate these issues. It’s also important to stay informed — yields that look too good to be true often are, and the fast-moving DeFi space requires regular attention and adjustment.

In sum, staking may be the starting point for Ethereum yield, but it’s just the beginning. DeFi strategies such as liquidity provision, lending, automated vaults, and exposure to real-world assets offer ETH holders numerous avenues to generate income. Each comes with its own set of trade-offs in terms of risk, complexity, and potential returns. As the Ethereum ecosystem continues to innovate, those willing to explore beyond basic staking will find a growing toolkit of options to put their ETH to work — and potentially achieve better financial outcomes in the process.