With the onset of the crypto winter, token holders are thinking about new ways to increase their income. Selling cryptocurrency now means going into deep redemption for many. There are options in the crypto market to wait out the crypto winter with passive income – some of them are similar to income in the form of interest from deposits and dividends. If you are interested in can I get a bitcoin loan, then check out how to get profits from cryptocurrency.
Those who had time to buy crypto before the last price rise came out with large profits (for example, Tesla, whose BTC on reaching $64 thousand per unit reached $3 billion). Experts predict at least a return to the previous high by the end of the year. Be that as it may, it is logical that there is always interest in the asset.
The easiest way to buy bitcoins on the WhiteBIT exchange is to use the instant exchange service.
- If you do not have any cryptocurrency in your cryptocurrency wallet: you need to put USD, or EUR on the main balance, then transfer funds to the trading one. After that, buy the asset. The transaction is carried out instantly.
- If your wallet has another cryptocurrency: transfer funds from the main to the trading balance and selects the digital asset you have in your account to buy.
So, three easy, low-risk ways to invest and make money on bitcoin with Europe’s leading cryptocurrency exchange, WhiteBIT.
SMART-stacking vs. bank deposit in dollars
The first easy way to earn bitcoin is to leave it on deposit. This service is already offered by some of the best cryptocurrency exchanges. Here it is important to choose a provider that is competitive with both traditional financial institutions and other exchanges. At WhiteBIT, this service is called SMART-stacking and is highly competitive with both banks and other crypto platforms for several reasons:
High deposit interest. The market offers anywhere from 5% APR on bitcoin. But WhiteBIT provides a 28% rate.
- Competitiveness to banks. Traditional financial institutions offer 1.5% to 11.25% for 12 months for a dollar deposit. Therefore, $1,000 will only yield $15 to $125. Translated into bitcoin, that amount would bring $280 if left at interest on WhiteBIT.
- Timing, rate, and profitability. You can deposit to the bank for seven days. At the stock exchange – from ten. At the same time, there is a profit from investing in cryptocurrency, it does not make sense in the bank.
In cryptocurrency, there are deposits, too, like in banks, only here everything is managed by exchanges. Banks take clients’ deposits, lend them out as loans and make money on the difference in rates. By analogy, cryptocurrency exchanges take cryptocurrencies at interest and reinvest them, for example, in margin trading.
According to the cryptoanalyst, the variability of cryptocurrency deposits is higher both in terms of maturity and conditions (with a floating rate or fixed rate, with regular interest accrual, or at the end of the term). Deposits on large exchanges can be called relatively reliable because there is little chance of hacking and turning the project into a scam, where customers can be left without money.
Experts warn that there is a risk of losing money only if the exchange is hacked or if the price of an asset drops drastically. On the Binance exchange, there is a deposit in the cryptocurrency SOL at 35% per annum for 15 days, as well as an offer with a floating rate (the rate is periodically revised and depends on the market situation) of 20% for the deposit in AXS. On average, the fixed rate is 2-5%, while the floating rate starts at 2%. According to Tarasova, passive income through deposits can, in rare cases, reach 50% per annum.
Lending is the provision of virtual currency to other market participants at interest and with collateral. The method is suitable if you want an income higher than deposits and you have crypto to keep for the long term. Lending is such a distant “relative” of bonds.
Crypto money is issued with a guarantee that if something goes wrong, the amount will be returned with interest. The guarantor is the exchange through which the banding is done. Large exchanges like Binance implement lending through fixed-rate deposits, Tarasova explained. According to her, it’s possible to earn 5% per annum on lending, and the risks are similar to the risks of deposits.
You should not be seduced by the high-interest rates of certain projects. One should only trust those who have accumulated a high reputation over the years, have passed numerous audits, and have an insignificant chance of becoming a victim of hackers.
Balancer positions itself as a portfolio manager in addition to its AMM-based DEX. Instead of paying commissions for investing in the fund, Balancer pool holders collect commissions from traders who arbitrage liquidity pools. This essentially creates an index fund that earns additional fund rebalancing income, adding another source of income for liquidity providers. Unlike Uniswap, which only supports two assets in one liquidity pool, Balancer supports multi-asset pools.
How to put crypto at interest: tips for digital rentiers
Pool creators are also allowed to set individual commissions ranging from 0.00001% to 10%. This flexibility opens up more options for pool creation. There are three types of liquidity pools:
- Public pool – anyone can add liquidity, but the parameters of the pool are permanently fixed. This is the pool with the least necessary level of trust in the creator.
- Private pool – flexible parameters. The owner is the only one who can change parameters and add liquidity. This makes the pool custodial and centralized.
- Smart pool – anyone can add liquidity. The pool supports fixed and dynamic parameters that can be changed permanently. It is the most flexible pool.
Bancor was one of the first decentralized exchanges based on AMM. Unlike Uniswap, which uses pairing a base token with any target ERC-20 token, Bancor uses its token, the Bancor Network Token (BNT), as an intermediate currency. There are separate pools for each token traded with BNT. Bancor uses one-way stacking and non-permanent loss insurance.
Most AMMs require liquidity providers to provide an equal ratio of each asset represented in the pool, Bancor allows liquidity providers to contribute to one asset and maintain a 100 percent stake in it.
How to put crypto at interest
Liquidity providers can long an asset with one-way liquidity while earning an exchange fee and a liquidity mining fee. Non-permanent losses are a risk that affects most liquidity providers on AMM. Bancor incentivizes liquidity by offering compensation for any non-permanent losses. Starting on the first day of liquidity investment, the payout increases by 1% each day and reaches 100% after 100 days. This loss coverage encourages liquidity providers to stay in the pool.
The SushiSwap protocol was launched in 2020 by a developer under the alias Chef Nomi. It was a fork of Uniswap’s second version source code and used the same market maker model based on a constant work value. SushiSwap introduced the SUSHI token at a time when Uniswap did not yet have its UNI token. Attractive farming rewards caught the community’s attention.
As of early February 2022, SushiSwap has a TVL of $1.74 billion, and Uniswap has $8.29 billion. Since its launch, SushiSwap has distinguished itself by offering a wider range of financial products. It also partnered (merged) with Yearn Finance, a pharming aggregator protocol, and now AMM is a division of Yearn Finance. The key difference between Uniswap and SushiSwap is the trading fees, available trading pairs, and supported blockchains.
Aides for the novice crypto investor
As you can see, to extract interest from crypto, you need to at least make a choice of which tool to use. And to do that, you have to navigate the market for decentralized finance offerings. That’s why experts warn that there are no easy ways into crypto investing.