Earnings on cryptocurrency: Stacking and Stablecoins
Over the past couple of years, the number of people who have made their first fortune on digital coins practically from scratch has been multiplying. It’s no wonder that newcomers are also thinking about how to get rich off of it. But they don’t know where to start. Whether it’s mining, investing, trading, or creating and selling NFTs, there are dozens of options.
Mining or investing in stacking? To conquer the NFT market, to trade on the exchange, or to finance an upstream project? Many people want to know if can i get a btc loan, let’s break down this form of earning in more detail.
The peculiarity of new projects and DeFi
Undoubtedly, new projects are potential opportunities, but you should not throw money at everything, hoping to guess and pull a lucky lottery ticket. DeFi is cool either way and after the first serious flare-up this summer, we’ll see a new round of growth.
The DeFi sphere and income farming strategy can seem complicated for inexperienced users. That’s why similar solutions have appeared on conventional trading platforms. For example, the Binance exchange offered a yield of up to 1,200% per annum, although the figure later dropped several times over. A product with similar functions was launched by Huobi.
Centralized venues also have more conservative options for getting the most out of digital assets. For example, holders of many tokens can earn on exchanges by stacking – this feature allows for passive income by increasing the number of coins. However, there is a risk here of losing on a drop in the price of the token used for stacking. Rates can range from 1 to 20% and sometimes be higher, you can find the most profitable option by using the service stakingrewards.com.
Opening a deposit in stablecoins
A safer approach is to open a deposit in stablecoins such as USDT, BUSD, and others. Their exchange rate is pegged to the dollar, which acts as insurance against a decline in the value of the asset. The annual yield on such deposits is usually 5-8% per year.
Now many stock exchanges provide stacking. Moreover, the yields are different. One of the most interesting options is on the Waves. Exchange here is available stacking USDN with a rate of 13.25% per annum, although it is floating, about 10-25%. USDN is a cryptocurrency token on the Waves platform, algorithmically linked to the dollar.
In all of the above methods, the main risk is the counterparty risk. Any, even the most famous and large exchange can go bankrupt, it can be hacked or user funds can be stolen. In the case of DeFi-platforms, they often launch and start attracting customers without running a code check. Because of this, there is a risk that the service will be found to have a critical vulnerability that will result in the loss of customer funds. This happened to the YAM project on the second day after its creation, during which the price of the token of the same name dropped from $167 to $1 within half an hour.
There is another way to improve efficiency with cryptocurrency. For example, it is possible to increase capital with the help of arbitrage transactions. We are talking about earning on the exchange rate difference that is formed between different trading floors. On small exchanges, sometimes cryptocurrency prices lag behind market fluctuations. If such exchanges do not have trading bots, which correct the rate of coins to market values, there is an opportunity to earn on the difference in rates. For example, buy an asset on an exchange where the price has already fallen, transfer it to another exchange, and sell it there while the price has not yet changed.
On cryptocurrency exchange 1, for example, bitcoin is trading at $9800. On exchange-2, bitcoin’s price is $9600. The trader buys 1 BTC on the second exchange, transfers it to the first exchange, and sells it there. He ends up with a $200 profit, which is the inter-exchange spread.
You can also track such opportunities with coingecko.com and coinmarketcap.com aggregators and others. But the exchange rate difference is rare for other reasons. There may be no withdrawal of fiat money on the exchange. You should also keep in mind that this way fraudulent trading platforms can attract users to steal their funds. Therefore, before transferring coins to an unfamiliar exchange, it is extremely important to check whether withdrawals work on it.
The field of decentralized finance gained widespread popularity in late spring and early summer of this year. Many tokens related to it showed growth by hundreds and thousands of percent. For example, the leader of this market, the YFI coin, has appreciated by more than 100,000% since its creation in the middle of July, and there are many similar stories. Changpeng Zhao, head of the Binance exchange, said that there are a lot of bubbles in the DeFi sector, with incoming projects often living on “empty promises” and dying two weeks after launch.
Stacking is truly a passive story: there are tokens for having which the owner gets revenue from them. The more money you have, the higher your income. You place and store coins in a cryptocurrency wallet over a long period and get rewards for doing so. According to many analysts, stacking is similar to a deposit in a bank because in both cases the owner receives interest on the initial investment. However, the returns in stacking are formed from the fact that the user helps keep the system running.
Stacking can be applied to cryptocurrencies such as Tether, USDC, Solana, Cardano, DASH, and Tron. It is possible to earn from 5% to 70% per annum on stacking. Ethereum is the first place to look, as the company is completing an upgrade in September that will make stacking income possible. Coins or tokens are not the most stable in terms of their rate. It can be the case that you get income, but it goes down in hard currencies.
To reduce the risks of stacking, you need to diversify your investments and never invest all in one cryptocurrency, and choose tokens with low volatility, meaning slow but steady growth, the analyst added. It is important to understand that stacking is not available for cryptocurrencies that are “mined” by mining, like bitcoin. Popular cryptocurrencies for stacking, besides Ethereum 2.0, is Avalanche, BNB Chain, and Polkadot.
The term Airdrop is mostly used on the crypto market in the case when a new coin or token is launched, and developers give them away for free as a promotional move. There are a lot of recipients during such actions, but each of them gets rather few coins, the maximum amount is $20-30. The main Airdrop-earning can be if the coin or token will become popular at launch, and its price will greatly increase, and you will have time to sell it.
In that case, you can earn hundreds or thousands of percent at a time, but you never know in advance which token will become popular. You should be especially careful with Airdrop stocks because there are a lot of internet frauds in them. The main advantage of an Airdrop is that it is easy to participate. Most often, it is enough to pass the verification, subscribe to the newsletter, and subscribe to the social networks of the project. It is worth carefully studying the terms of the action. You should know that new coins are distributed free of charge. If there is a financial background – it is not Airdrop.
I would like to finish with the words of a famous financier. Chen Limin from ICB Fund stated that Airdrop cannot be regarded as a passive way to earn money because it will require some actions from cryptocurrency owners. He also noted that many projects in the market began to give up this practice in Crypto Winter.