The mainstream has caught a whiff of the profits that cryptocurrencies like Bitcoin and Ethereum have seen, but many people are unaware of what passive income crypto users are also getting. While financial institutions only give 0.35% to 0.60% to people with savings accounts, digital currencies can give people with certain tactics 1-17% or even more.
Crypto returns the savings account
You may have heard the phrase “make your money work for you” in the past, and that is exactly what savings accounts do when they earn a percentage of the interest over time. Of course, a person can be a little riskier and invest in stocks and the like, but with a savings account, the money just sits there and generates a return over a period of time. The more money that is held, the more interest an account receives, but these days banks no longer give interest. We can see that some of the top banks in the world are only getting 0.35% to 0.60% returns, according to the best savings account rates on bankrate.com.
Bank rates today do not offer a person who saves high returns, none of them even offer 1%.
Now you can do the same with cryptocurrencies and get a much better Annual Percentage Return (APY). Many centralized exchanges offer between 1% and 12% interest for staking or holding a digital asset on the trading platform for a period of time. For example, on the Coinbase trading platform, you can earn 1.25% APY if you hold USDC. Coinbase also offers rewards for staking out Algorand (ALGO), Cosmos (ATOM) and Tezos (XTZ). These three coins are paid out either daily (ALGO), every three days (XTZ) and once a week (ATOM).
People can also take advantage of the Crypto.com exchange, which offers customers up to 2% to 6.5% per annum (PA) for a variety of cryptocurrencies and up to 12% for holding certain stable coins. Crypto.com users can choose an interest rate by choosing a term that can be either flexible, one month, or three months.
Flexible means that you can withdraw and use the cryptocurrencies at any time. You get 2% for supported crypto assets and 8% for stable coins. With a term of 30 days at Crypto.com, the person receives 4.5% for the average crypto asset, while up to 10% is achieved with stable coins. 90 day maturities are 6.5% for coins like ETH and BTC, and stable coins like USDC can be up to 12%.
The San Francisco-based exchange Coinbase has been offering savings premiums on certain coins and stake premiums for some time.
Coinbase and Crypto.com aren’t the only exchanges or custody solutions that offer interest-bearing accounts. Other interest-bearing products are offered by Blockfi, Linus, Outlet Finance, Gemini, Kraken, Youhodler, Coinloan, Nexo and the Celsius Network. Everyone has different conditions and interest rates, depending on the crypto asset they hold.
Most of these platforms offer higher percentages for stablecoins because fiat-backed crypto assets allow savers to achieve higher returns. Depot solutions are, of course, coins held by a third party and those who choose to seek interest in this fashion should understand that there is a higher risk. A custodian platform could fake reserves, be hacked, or even bring the business to its knees through bad business decisions. As the old saying goes, “Not your keys, not your coins”. So when you hold money on an exchange, trust them.
Use of proof-of-stake tokens, use of Ethereum 2.0
Individuals who want passive income can also do so by leveraging non-custodian platforms and employing concepts. A Proof-of-Stake (PoS) crypto-asset is used in staking, and the person needs a staking folder to perform this function (validate transactions) in order to receive the stake. Similar to a savings account, betting simply means holding the asset and rewarding coins for the amount the user is holding. The more tokens that are held during use, the more interest the user receives.
Currently, some people are using the Ethereum (ETH) with the new ETH 2.0 staking function. In order to earn the ETH in this way not subject to custody, the user needs a total of 32 ETH in order to be able to participate. However, the person can earn anywhere from 5% to 17% PA. Via exchanges like Kraken and Coinbase, people can also use ETH in a way that requires custody. The San Francisco Exchange Coinbase offers “between 3-7.5% reward for every ETH you use”.
Defi Apps based on Ethereum, Bitcoin Cash, Polkadot and Tron
In addition to using it, people who want to generate profitable returns on their crypto assets can use a decentralized financial application (Defi). There are numerous defi apps like Compound, Aave, Nuo Network, Ddex and Dydx that can provide a person with a return by simply providing liquidity or credit. A good number of these defibrillator apps that do not require custody also offer higher yields for stable coins these days.
Decentralized financial applications, also known as defi, allow people to generate returns in a non-custodial manner.
These types of apps allow users to earn returns on numerous ERC20 tokens such as TUSD, LINK, DAI, ETH, WBTC and USDC based on a period of time. Additionally, there are other blockchains moving towards creating broken ecosystems, including networks like Tron, Bitcoin Cash, EOS, and Polkadot.
An example in the BCH network is the Anyhedge protocol developed by the General Protocols team, a concept that allows users to use BCH with the Detoken application that is not kept.
“The first product available on Detoken is the Anyhedge BCH-USD futures contract,” the team said when the app was first launched. “This is a smart contract that allows users to secure or renew their BCH while earning a funding premium at the same time. Users also remain in control of their own money throughout the process. “
Make your money work for you
All of the above platforms and tools provide people with an opportunity to make their money work for them. Individuals can make a return by doing something they likely did before they knew they could earn interest – just keep it. This decentralized form of liquidity will continue to grow as long as the demand for crypto assets remains strong.
If mass adoption continues to grow, liquidity and potential profits can only improve over time. Once the mainstream hits these massively higher rates than the banks’ petty interest rates of 0.35% to 0.60%, it won’t be long before they want to convert their funds into something that will generate real interest over time.
What do you think of all the platforms and services that people can use to generate passive income by just storing their crypto assets? Let us know what you think on this matter in the comments section below.
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