Making money with crypto-currencies is relatively simple. Asset holders can extract tremendous value from their investments with little effort. However, exploring unique reward systems can be beneficial rather than earning returns in the traditional way.
Earning returns on crypto-currency investments
The most obvious way to make money with crypto-currencies is to buy low and sell high. Larger assets have a chance to appreciate over time, even if the current market outlook says otherwise. This requires no effort on the part of the user, except that they will only let go of these assets once the desired value threshold is reached. However, there are other options for those who prefer a slightly different approach.
Staking is the most direct way to combine the “buy and hold” with incentives. First, users must keep their coins in a wallet connected to the internet. Second, if the network for this currency runs the proof-of-stake algorithm, users can earn passive rewards as long as their wallet remains connected. Several of the major currencies, including Ethereum, Cardano and Solana, support staking, with average returns of about 5% per year.
More exotic options for extracting value include yield farming, liquidity farming and lending. Most of these efforts revolve around decentralized financial protocols. Users deposit funds into smart contracts and automatically accumulate rewards. However, return farming and liquidity provision are somewhat risky, as return rewards can be volatile assets, and liquidity can suffer from impermanent losses. However, they can provide decent returns, assuming one is willing to stay on top of earnings and adjust as necessary.
Lending is relatively explicit. Users make their crypto-assets available to another user in exchange for a return and interest. It is possible to explore lending in a centralized or decentralized manner. Both have advantages and disadvantages, depending on risk appetite and convenience requirements. Depending on the asset used for lending, returns can be equivalent to or slightly higher than those of staking.
Unique reward systems are gaining in popularity
It’s common to find ways to extract value from crypto-currency investments through seemingly unusual reward structures. So people were thrilled when PancakeSwap introduced a way for cash providers to wager their LP tokens and earn $CAKE. This momentum was further enhanced by the fact that they can also wager $CAKE to earn other $CAKE rewards. In essence, it’s a multi-tiered reward system in a single Dapp.
Another unusual way to earn on investments – although very similar to buy and hold – is to focus on DAOs. Specifically, decentralized autonomous organizations, or DAOs, are collectively owned by investors and community members. One can either join a DAO early on and receive rewards for being active, or invest in the token and participate in the project to create value. In addition, some DAOs may issue generated profits to token holders, which can lead to a passive revenue stream. The success of the DAO will influence one’s return.
Affiliate programs are also experiencing a revival in the Web3 era. Zonda Exchange, for example, offers users up to 80% of the commission paid by their downline. And unlike traditional exchange platforms, Zonda Exchange has both an individual and a professional version, one focused on mass adoption, the other offering tailored credit limits and additional support. The affiliate program will soon see native integration of Zonda tokens.
Passive and active opportunities
Regardless of how you want to approach the crypto-currency industry, extracting value from crypto-currency investments is possible for anyone. Some methods require a more active approach, such as Zonda’s affiliate program or helping a DAO you’ve invested in succeed. Others, like liquidity farming on PancakeSwap, require a small initial setup to start collecting all the rewards and can be run on autopilot afterwards.
Additionally, these options exist in addition to other passive return farming solutions, such as staking and traditional liquidity farming. In addition, the “buy and hold” mentality often suits those who are risk averse. The industry offers something for everyone, and the number of choices available continues to grow each year.