How to earn passive income with cryptocurrencies to “make money lying down” amidst market turmoil?

As one of the most revolutionary financial instruments, blockchain and cryptocurrencies offer many passive income opportunities for investors and are suitable for all risk levels.

How to earn passive income with cryptocurrencies to "make money lying down" amidst market turmoil?

With the uncertainty of future price action in the cryptocurrency market, many people are trying to figure out how to continue earning passive income in a down market. Fortunately, there are many options for cryptocurrencies, including lending cryptocurrencies, pledging and providing liquidity pools. (Note from BizTweet: Passive income is income that is earned automatically without much time, effort or care)

While the cryptocurrency market has recovered from its recent decline, almost every cryptocurrency has fallen back sharply from its all-time highs, and there is no guarantee that they will all bounce back quickly. Meanwhile, investors who have become accustomed to the daily gains in the cryptocurrency market have begun to look for other opportunities to increase their income. As one of the most revolutionary financial instruments, blockchain and cryptocurrencies offer investors many opportunities for passive income and are suitable for all levels of risk.

One of the least risky ways to earn passive income in the cryptocurrency market is to pledge cryptocurrencies on a proof-of-stake blockchain. Proof of stake is a consensus method that makes the blockchain secure and immutable. It is similar to using machines to mine cryptocurrencies, but instead of using computers, investors “stake” their cryptocurrencies on the network and use them as collateral to confirm transactions. Many see this as the future of cryptocurrency because it is more efficient and environmentally friendly than mining.

Nearly all major smart contract blockchains support pledges, including Binance Smart Chain, Cardano, Polkadot and Solana. in addition, ethereum will move to a proof-of-stake model where investors can lock their ETH through escrow services offered by exchanges such as Kraken and Binance to start using their ethereum. to start earning pledged rewards with their Ether. The return on pledge (ROI) depends on the blockchain and is usually not as good as it seems. For example, Polkadot advertises an annualized rate of return (i.e. APY) of 13%, but most of the DOT coins given to pledgers come from the network’s inflation, so the actual APY is closer to 4%. Just because a token has a high APY doesn’t mean it’s a good investment. In fact, many DeFi tokens that can be pledged and offer collateralized APYs above 100% typically have significant inflation, making them unsafe places to save money in the long run.

How to earn passive income with cryptocurrencies to "make money lying down" amidst market turmoil?

When pledging, it is important to choose a reputable custodian. If the custodian makes a mistake or stops helping to secure the network, your funds could be cut back significantly. However, if you choose a good custodian and a cryptocurrency with a strong base, pledging is one of the easiest and risk-free ways to earn passive income.

Another way to earn passive income is the DeFi protocol. For investors, there are two main opportunities available. The first is to deposit funds into a lending platform such as AAVE or Compound. These platforms accept tokens such as USDC, ETH, WBTC and LINK and lend them to borrowers who want to get an over-the-top mortgage. These yields are significantly higher than those of traditional bank savings accounts, and in some cases can be as high as 15-20%. For example, Terra’s Anchor Protocol is designed to enable stablecoin deposits to earn a 20% ROI. The two main issues with lending are the risk of hacking of the DeFi protocol, and the variable and volatile interest rates, which means that one day a 15% ROI could turn into 1.1%. The risk is minimal for a reputable audited program, but still exists.

How to earn passive income with cryptocurrencies to "make money lying down" amidst market turmoil?

Another major opportunity for DeFi is the placement of funds in liquidity pools such as Uniswap or Pancakeswap. in traditional finance, when people want to use stock trading platforms such as Fidelity or Robinhood, these platforms must hold both the shares and dollars that the user wants to buy in case they want to sell . In the decentralized financial world, this obligation is taken on by liquidity pool providers who can deposit two tokens (e.g. ETH and USDC) into a liquidity pool and earn transaction fees from users through exchanges. For example, if someone deposits USDC and ETH into Uniswap, they will receive a reduction in transaction fees whenever someone decides to use USDC to buy ETH on Uniswap. On Pancakeswap and Sushiswap, these gains are even higher because they offer CAKE and SUSHI tokens as incentives to provide liquidity. This can lead to incredibly high APYs of 100% or even higher on certain tokens.

How to earn passive income with cryptocurrencies to "make money lying down" amidst market turmoil?

The main risk of providing liquidity is the possibility of impermanent loss, which is the difference between the assets in the liquidity pool and the assets in two positions outside the pool due to changes in the coin price. This happens when one token rises more than another, due to the fact that the liquidity pool must maintain a 1:1 ratio between each token. So if the Ether price goes up and more people use USDC to buy ETH from the pool, the pool provider will have a larger share of USDC than ETH and will make more money holding the assets directly. As with any DeFi protocol, there is a risk of being hacked. However, the token rewards on Pancakeswap and Sushiswap mitigate the impermanent losses to some extent. Nevertheless, this is one of the riskier options.

How to earn passive income with cryptocurrencies to "make money lying down" amidst market turmoil?

A final option to consider is centralized finance (CeFi), which is lending through platforms such as BlockFi, Nexo and Celsius. These platforms offer stable rates for popular cryptocurrencies and stable coins, and are sometimes hack-proof. Unfortunately, these services require KYC and are subject to traditional banking laws, but may be a good option for those without sufficient experience.

A depressed cryptocurrency market does not mean there are no opportunities for gains. With the DeFi platform and pledges, investors can “make money on the back burner” and achieve financial freedom.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/how-to-earn-passive-income-with-cryptocurrencies-to-make-money-lying-down-amidst-market-turmoil/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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