Buying and selling digital assets is not the only way to make money on the crypto market. Experts explained how to diversify the portfolio and get more profit
Over the past month, bitcoin has risen in price by 1.5 times. The cost of the first cryptocurrency on the morning of August 23 for the first time since mid-May exceeded $50 thousand. Investors who bought bitcoin for $30 thousand per coin in May, June and July have already been able to get almost 67% of the profit. But buying cryptocurrency is not the only way to get income from digital assets.
Landing is a method of passive earnings, which involves the temporary transfer of cryptocurrency at a percentage. A crypto investor lends either to exchanges (and they increase liquidity due to this), or to individuals. The transferred funds are blocked in the smart contract.
For example, there are two types of landing pages on Binance, the largest cryptocurrency exchange in terms of trading volumes:
An indefinite contract. It has a low interest rate, but funds from such a contract can be withdrawn or added at any time;
A fixed contract. It is usually set for a certain period of time (10, 15, 30 days, etc.). It has a higher interest rate. Funds from such a contract cannot be withdrawn until the end of its validity.
Binance users have the opportunity to invest cryptocurrency in an indefinite contract using USDT stablecoins. The interest rate on such a deposit will be 1.2% per annum. A higher interest rate — 3.3% per annum for an indefinite contract of the 1Inch token.
The fixed contract of the Axie Infinity token (AXS) offers 15% per annum. But the funds invested in the contract will be unavailable for 14 days. On the BlockFi decentralized platform, an indefinite landing in USDT stablecoins is available at 9.3% per annum. The landing platform Celsius provides a fixed contract for Ethereum at 5.3%.
Stacking is a method of passive earnings, in which users store coins on the Proof of Stake (PoS) algorithm, ensuring the efficiency of the blockchain. This gives the holders the right to profit. This feature is available only to cryptocurrencies that work on PoS, for example, EOS, Tezos, TRON and Cosmos.
The meaning of stacking is to ensure all operations on the blockchain and support the operation of the network. For this, holders of digital coins receive a reward. The more tokens the holder has, the more likely it is that he will become the creator of a new block.
What is stacking and how does it differ from mining
The use of stacking depends on the investor’s strategy, the senior analyst explained Bestchange.ru Nikita Zuborev. According to him, if the asset holder is willing to put up with the inability to sell it for a long time, then stacking will become an additional source of income.
“In the medium and long-term strategies, you can receive additional funds for your open positions, which looks very interesting against the background of the traditional financial market. This strategy turns the purchase of altcoins into an alternative to bonds, with their accumulated coupon income, ” the analyst noted.
According to Zuborev, stacking can bring from 3% to 15% per annum. The most promising tokens for stacking are those that have a medium-term tendency to increase the exchange rate, otherwise the additional issue of coins will not even help to cover the exchange rate difference, the expert says. Therefore, first of all, you need to pay attention not to the percentage of stacking, but to the stability of the trend of growth in the value of the token, he added.
The most interesting tokens for stacking can be: EOS (EOS), Stellar (XLM), Cardano (ADA), TRON (TRX) and Tezos (XTZ), Zuborev believes.
“Stacking can be called a full-fledged alternative to bank deposits or bonds. This is a conservative tool that allows you to reduce risks in some strategies, ” the analyst stressed.
According to him, the risk depends on the choice of the asset class and the type of funds blocking. For example, stacking volatile altcoins with a fixed lock for a long time will have the maximum risk, and stacking stablecoins with a flexible lock will have the minimum, the expert added.
EOS stacking is available on the Binance exchange for 30, 60 and 90 days. The stacking yield is 4.2%, 4.6% and 6.1%, respectively. The Huobi Global crypto exchange offers TRON (TRX) stacking at 7% per annum. Cosmos (ATOM) stacking is available on Coinbase with an interest rate of 5% per annum.
If an investor does not have experience working with crypto assets, but wants to start making money on them, then the best solution is to use cryptocurrency funds, says Maria Stankevich, director of development of the EXMO crypto exchange. According to her, when working with the fund, the key risks are discussed in advance and the investor can be more calm about his funds than if he buys a cryptocurrency on his own.
What are cryptocurrency funds and is it possible to earn money on them
“An interesting fact is that if a novice client says that he is ready to accept the maximum risk and wants super profits, he is always offered a low-risk or medium-risk strategy, since such clients usually do not realize the full danger of high risks,” the expert explained.
The most promising cryptocurrency funds are considered to be Pantera Capital, Bitcoin Investments Trust and Blockchain Capital, Stankevich noted, but they are more focused on large investors. There are also funds with a good reputation for retail investors, the expert added.
When choosing a crypto fund, Stankevich recommends studying its reputation in the market and its work history in order to protect yourself from fraudsters.