Four Ways to Earn Interest on Crypto
Cryptocurrency has become the buzzword of 2021, with an explosive breakthrough during the global pandemic. Thus, the crypto space has been witnessing flocks of new users trying to earning interest on crypto every year, but not everyone can succeed. Many simply give up halfway or get trapped in scam projects and lose money.
However, there are many ways for you to safely make money from crypto. Therefore, today we at Money Fit will share some most common and easy ways to get rich with crypto.
Crypto Staking
Staking is simply understood as the deposit of tokens to receive interest. To be able to stake, investors need to buy, hold and lock tokens for a specific period of time. This is a method that has the potential to double earnings through price appreciation and interest payments from selected coins for staking. The most popular staking coins are Synthetix, Algorand, Cardano, POLYX, Polkadot, Avalanche, Cosmos, and Tezos.
DeFi Protocols
DeFi (Decentralized Finance) is a collection of applications that provide financial services such as trading, lending, investment, or payment on the blockchain platform. This is a platform that allows users to access and operate without going through any intermediaries or controlling agencies.
The DeFi platform aims to:
- Eliminate banks and traditional brokers.
- Facilitating faster and cheaper financial transactions. No minimum transaction amount and no paperwork are required while ensuring complete transparency.
Below are some of the most common ways to earn interest via DeFi protocols:
Hold
Hold (or Hodl) is when you hold a cryptocurrency with the belief that it will increase in price in the long term and sell when it reaches the desired profit levels. Making money this way requires you to have a strong mentality and good discipline because of the volatile nature of the market. If not, you may sell at the bottom of the market and Fomo buys at the top.
Trading
This is a form of short-term trading to make a profit. In this way, you have to be a quick-witted person with the market, know technical analysis, have to manage capital, and manage risk very well. To start, you can deposit a little to conduct a trial trade, and remember to use only a very small amount of capital and it will not affect you if you lose. When investing in certain coins, research carefully. It is best to choose coins with large capitalization, high liquidity, and a large community.
Joining IDO
Similar to ICO and IEO, IDO (Initial DEX Offering) is also a form of coin issuance for the first time, but the difference here is that it is issued on a decentralized exchange (DEX). To participate in IDOs, you must conduct KYC (identity verification) and use the exchange’s tokens to buy IDO packages to prepare the list on that decentralized exchange. After the coin is officially listed on the exchange, you can sell it or continue to hold it to achieve the desired profit.
Usually, if you can buy IDOs, your ability to x2 x10 x100, even x1000 times the asset is possible because you have bought the cheapest coins. However, the possibility of failure is also very large because a lot of IDO projects are not valuable, the Dev team is not good.
Lending
This form allows you to earn a profit by accruing interest on your loans. Basically, you lend your assets to margin traders on a crypto platform and they pay you interest in return for lending money. You can choose from many like Bitcoin (BTC), Ethereum (ETH), Binance USD (BUSD), Tether (USDT), Dao, 0x…
Yield Farming
It is used to maximize the return on investment of DeFi investors with various products in the DeFi ecosystem. Although there are many methods to optimize profits using Yield farming. But the most common approach is to use liquidity tokens provided by DeFi platforms.
Yield Farming is the process of locking crypto assets into platforms that provide lending and borrowing services. Typically, liquidity pools hold these funds to provide liquidity across networks.
Exchange Wallets
Just like other currencies, cryptocurrencies are also stored in wallets. A cryptocurrency wallet is a software that helps to store, send, receive and track the balance of cryptocurrencies such as coin/token within it. Most prominently in this category is the exchange wallets, with which users can make money. This is probably one of the wallets that a lot of people use. Exchange wallets are wallets created on exchanges and users do not directly hold Private keys, so there will be some risks such as scam floors, or suddenly being shut down, unable to withdraw money.
The reason that many people use exchange wallets is because of their convenience. Retail investors often buy coins by depositing Stablecoins on the exchange and buying the coins they want, then they will leave the assets on there to be able to sell them faster. Or if the purchase is not too much, the fee to withdraw the asset to the wallet sometimes becomes unreasonable compared to the asset value.
Third-Party Savings Apps
Crypto enterprises across the ecosystem offer a savings plan for consumers who want to generate passive income on their crypto assets. By simply staking your crypto assets with a service provider, you can earn interest rates of up to 20% APY on your crypto holdings. Crypto savings accounts offer a greater rate of return on deposits (due to price volatility risk), ranging from 5% to 12% annual percentage yield (APY), as compared to standard bank savings accounts, which pay only 0.5 percent APY.
Conclusion
The crypto market has been growing very rapidly in recent years and promises a lot of potentials. The sooner you join this market to earn cryptocurrency, the more opportunities you will have to get a higher income. The cryptocurrency market is diverse and constantly evolving, so take advantage of different and appropriate ways to increase your income.
In this article, we only mention the most basic and common forms of earning interest in the crypto space. Let us know if you have other ways to make money from the cryptocurrency market by leaving a comment below this article.
