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Do you want to get paid to HODL? Here are five simple ways for crypto investors to profit without trading.
Large price jumps and 100x gains attract a lot of attention from cryptocurrency pundits and influencers because they offer the possibility of overnight riches.
In reality, such chances are few and far between. Not to mention, only a select few traders are able to ride these waves and cash out in time to lock in life-changing profits.
Fortunately, catching a large price surge is far from the only way for crypto investors to make money, and the recent rise of decentralised finance (DeFi), nonfungible tokens (NFTs), and the slow march of mainstream crypto adoption provides a seemingly limitless stream of investment opportunities.
Let’s take a look at five different ways cryptocurrency holders can make a quick buck without having to trade.
Staking, which rewards users for locking tokens on a protocol as collateral for transaction validation, is one of the most effective ways to earn a return on assets held in a crypto-based portfolio.
The Ethereum network will transition from a proof-of-work (PoW) consensus model to a proof-of-stake (POS) model in August, and Ether (ETH) holders who stake in the Eth2 contract will earn up to 5.83 percent.
Token holders actively participate in transaction validation under this new PoS system by locking their coins in network nodes, which then compete for a chance to verify transactions, create new blocks, and receive the rewards that come with it.
Data from Staking Rewards shows that a stake of 10 Ether currently results in a weekly earning of 0.0075 ETH, worth $17.96 at current prices, and a yearly earning of 0.3876 ETH which is currently worth $933.69.
The percentage yield for Ether decreases as more tokens are locked on the network so the final earnings may change.
All things considered, staking provides one of the best low-risk opportunities in crypto to gain a bigger stack regardless of market sentiment or performance, while also helping to support the network through transaction validation.
Lend crypto for low-risk yields
The expansion of the DeFi sector has resulted in the development of a diverse crypto lending ecosystem, in which users can deposit their cryptocurrencies to various lending protocols in exchange for rewards in the underlying token or in different assets such as Bitcoin (BTC), Ether, and various altcoins.
Aave is the leading lending protocol at the moment, and the platform offers yield opportunities for tokens on the Ethereum and Polygon networks via its native coin MATIC.
The chart above depicts the top seven lending pools available on Polygon via the AAVE protocol, with rewards paid in Wrapped MATIC (WMATIC), with a current deposit annual percentage yield (APY) of 1.92 percent and a yearly estimated APY of 6.1 percent.
Curve (CRV), Compound (COMP), MakerDAO (MKR), and Yearn.finance are some of the top lending protocols (YFI).
Lending is another low-risk way to earn a decent yield on tokens that do not provide user-controlled rewards, such as staking.
Earn fees and tokens from providing liquidity
Liquidity provision is one of the primary components of a DeFi platform, and investors who choose to provide funds to emerging platforms are often rewarded with high percentage returns on the amount staked, as well as a percentage of the fees generated by transactions within the pool.
As shown in the image above, providing liquidity to an Ether/USDC pool on QuickSwap entitles an investor to a percentage of the total daily distributed rewards of $23,098 and a fee APY of 33.81 percent.
Long-term investors would be wise to research the market’s available pools, and if a liquidity pair comprised of solid projects or even a stablecoin pair such as USDC/Tether (USDT) looks appealing, it has the potential to be the blockchain version of a savings account that offers far better yields than can currently be found in any bank or legacy financial institution.
Maximize returns by yield farming
Yield farming is the concept of putting crypto assets to work in a way that generates the highest yield possible while minimizing risk.
As new platforms and protocols emerge, they offer high incentives to depositors as a way of mining for liquidity and increasing the total value locked (TVL) on the protocol.
Rewards for STKGHST-WETH LP deposits on DinoSwap. Source: DinoSwap
The high yields are generally paid out in the platform’s native token, as seen above, where a user deposited a liquidity pool token for a STKGHS-WETH pair with an APR of 189.2 percent and has so far generated a reward of 3.312 DINO.
Long-term investors with a diverse portfolio of tokens can use yield farming to gain exposure to new projects and obtain new tokens without having to spend new money.
NFT and blockchain gaming make ‘play-to-earn’ a reality
Blockchain gaming and NFT collecting is another way to produce a return on a crypto portfolio without spending new funds.
The most popular example at the moment is Axie Infinity, and the in-game play involves trading, battling, collecting, and breeding NFT-based creatures known as Axies.
Playing Axie Infinity earns you Smooth Love Potion (SLP), an in-game token that is used in the Axie breeding process and is also traded on major cryptocurrency exchanges. Users can exchange SLP for stablecoins denominated in US dollars or other large-cap cryptocurrencies.
According to Your Crypto Library, “today, the average player earns between 150 and 200 SLP per day,” which is worth between $40 and $53.50 at current market value.
In some parts of the world, that equates to the earnings of a full-time job. As a result, Axie Infinity has seen a significant increase in user activity and new accounts in countries such as Venezuela and Malaysia.
Crypto investing, lending, staking, and play-to-earn blockchain games provide a much higher return on investment than savings and checking accounts offered by traditional banks. As the blockchain industry expands, it is likely that investors will continue to flock to platforms that offer high returns for participating in the protocol.
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