Earning Crypto (with Crypto): Things to Consider24.03.2020, 09:57
The blockchain and cryptocurrency space continues to develop and 'wow' traditional finance, and many are stocking up despite the uptrends and downtrends. In fact, there’s a big trend towards simply ‘hodling’ or holding on to your digital assets with the lure of attractive interest rates or staking rewards, versus trading the 24/7 varying degrees of volatility.
This is due to the wide array of passive income options for earning ‘crypto from crypto’ that now exist, offered by exchanges, wallets or dapps, and also to ‘de-fi’ dapps.
With the Coronavirus making markets even more volatile, many might be tempted to remain in stablecoins or large-cap cryptos and earn interest. That is, until the next bullish news hits the web, and funds pour back into bitcoin and altcoins.
Of course, here at Prizes Drop, we offer our members free Bitcoin and Ethereum in exchange for our points collected by completing various mini-tasks.
You can earn attractive interest rates by:
- Lending your crypto via 'de-fi' dapps
- Lending your crypto via exchanges
- Staking it on certain blockchains (directly - or more easily - via delegation)
- ‘Soft-staking’ on exchanges
- Compound interest dapps
Keeping crypto on Exchanges
Major exchanges like Binance and Kucoin will stake certain cryptos you hold there automatically (‘soft staking’), where you can still keep control over your coins, and trade them. But there are a few things to bear in mind, such as security and proxy voting. Centralised exchanges are far more vulnerable to hacking. It’s true, security has improved with features like Whitelisting withdrawal addresses (a good thing to do), 2FA authentication etc and it’s likely these large exchanges will reimburse your crypto in the event of a hack. Still, the centralised mechanisms remain the same. Decentralised exchanges and dapps utilise wallet security so funds remain more secure.
Also, by keeping your crypto on big exchanges (or locking it up into fixed deposit packages) you may also be handing them your voting rights. You’ll be contributing to higher centralisation and voting power versus individual staking and supporting networks. Also, a lot can change in crypto in a short space of time. As we’ve seen recently (with the 2020 Tron takeover of Steem) this can interfere with the healthy governance and decentralisation of a network. The Steem community in this case came together and have voted to hardfork onto a new blockchain called Hive.
So hodlers should still consider security carefully: are you truly comfortable handing digital assets to centralised entities where you don’t have the keys? In this way, they are acting in a similar vein to banks, and are in business to profit, either via trading fees for their in-built exchanges, or by fees involved with instant swaps, withdrawals etc. Taking a percentage of your staking rewards is just another happy addition for them.
Actually Supporting a Network
Collector's NFT for sale on Makersplace
For cryptos (such as EOS, Tezos, Ethereum) where blockchain networks include smart contracts, governance voting, dapps etc, you may (surprisingly) want to experiment with that crypto on the network itself, via dapps! Therefore, it’s recommended not to store these coins beyond native wallets - where you can choose to transact on the blockchain, play around with new dapps, vote and support the network. Wallets where you can do this (and still earn staking rewards) include Trust Wallet.
Obviously, a lot depends on which crypto and at what stage of development it has reached. Certainly though, the above option (or using native wallets) remain the best choice for security, and the good news is you can still interact with staking dapps in this way, and earn rewards, and use De-Fi dapps (see below).
With EOS, as another example, there are amazing mobile wallets such as Meet.One where you can still interact with dapps and rent out your tokens via the REX exchange for passive income.
Earn Interest using 'De-Fi'
If you decide to stand back from the development of a blockchain network, then you can still earn attractive interest from lending out your crypto (more safely and securely) with De-Fi or Decentralised Finance apps. Again, this can be achieved from your secure mobile or browser wallet like MetaMask or Trust Wallet.
With a range of cryptos or Ethereum tokens stored here, you can then interact directly with dapps such as Aaave, Oasis or Nuo which are non-custodial for lending and borrowing. Some of these rates fluctuate according to supply and demand. Defisaver.com has some nice extra features and dashboard for De-Fi savers and users of these Borrowing and Lending dapps.
You can also use Coinmarketcap’s new comparison site to compare rates with some of these dapps or exchanges.
As ever, this new and rapidly-evolving arena of Web3 is not without risks. The slow nature of Ethereum amidst all the Coronavirus market chaos congestion, recently led to sudden MakerDAO loan liquidations and the DAI savings rate being halted.
However, this will not halt the growing shift towards decentralisation being boosted only further due to these uncertain times.
In the meantime, you can keep earning our points for free Bitcoin and Ethereum, by signing up today and completing various mini-tasks.
[Main image credit = Pixabay]