The crypto market is currently flooded with opportunities for people to make money. Everyone understands that buying and trading coins is a great way to optimize your earnings, but what about passive investors?
Like traditional finance, crypto has grown well enough that investors are now capable of making money while not doing so much. If you’re a passive investor who buys assets and just waits, then you will want to see the best opportunities for you to earn in this fledgling market.
Proof-of-stake (PoS) is the new form of mining that most coins today are adopting. In the early days of crypto, mining was the way for people to get their hands on new coins. However, mining has so far been criticized for being resource-intensive and bad for the environment. Now, most coins are adopting the PoS standard.
With PoS, you don’t need to mine coins or buy any expensive gear. Instead, you simply put your coins in a protocol and wait. The blockchain chooses a wallet at random to min the next block of transactions to be added to it, and the wallet is eventually rewarded with new units of the tokens.
Besides rewards, many staking protocols also offer interest to stakers. This means that whether you stake or not, you will get money. Even better, some staking tools offer free airdrops to investors who stake their coins regularly. Quidax - an African crypto exchange - launched a staking service in 2021 for its native coin, QDX. Since the service went live, the exchange has given units of Shiba Inu and Floki Inu to customers who stake their coins.
This structure makes sense because it incentivizes people. You don’t need to buy any expensive gear with PoS, and you get to enjoy a great deal of upside.
Today, several coins can be staked. You can stake Ether, Cardano, Solana, and so much more. Considering how PoS blockchains have become very popular, these coins can deliver impressive gains on their own - the staking rewards are a nice bonus.
Interest-Bearing Crypto Accounts
When you put your money in a bank, it earns interest. Today, several crypto services have done something similar with their platforms - helping people earn interest on their deposits.
So, instead of holding your coins in a wallet, you could deposit them into these interest-bearing accounts and get earnings at intervals - daily, weekly, monthly, etc. There are pre-determined interest rates already, and you can guarantee that your money is in safe hands.
Some popular services that offer interest on crypto deposits include BlockFi, Celsius Network, and Nexo.
Lending has become another highly popular service in the crypto market. Everyone needs money, and it has become obvious that traditional lending services might not be the solution to this - with their high-interest rates and barriers to entry. So, crypto lending has become a viable solution for many.
As a crypto investor, you could lend your assets to borrowers and get your interest in return.
Primarily, there are three different types of crypto lending:
- Peer-to-peer lending: Here, you lend to borrowers directly. You can set the interest rate and other terms, so you control pretty much everything. All the platform has to do is connect you with the borrower, and you’re in business.
- Centralized lending: Here, you simply provide the assets. A third-party platform handles the transaction, offering a fixed interest rate and time frame for the loan. You transfer your coins, the platform disburses, and you get your interest when it’s due.
- Decentralized lending: In the past two years, there has been a significant shift towards decentralized finance (DeFi). Today, platforms like Aave hold billions of dollars in assets, offering easy loans to customers. With DeFi lending, there is no intermediary. Instead, lenders and borrowers interact with smart contracts that set interest rates autonomously.
While PoS coins are the newest trend, cryptocurrency mining is still very much in vogue. But, how do you overcome the high barriers to entry? This is where mining pools come in.
A mining pool is a collection of people who combine their computing power and try to mine coins. They can consist of just ten people, and some pools are as high as having hundreds of members. In a mining pool, everyone contributes something. If the pool gets to mine an asset, the rewards are shared among members based on their contribution to the total computing power.
Mining pools are awesome because they allow you to mine assets without having to buy any of the expensive gear. You can get started with whatever device you have and work your way up from there.