With the onset of crypto winter, token holders are considering new ways to supplement their income. For many, selling cryptocurrency now means going into the red. On the crypto market, there’s an option to ride out the crypto winter with passive income – some of which are similar to interest on deposits and dividends.
Earn Crypto Passive Income
The modern banking system cannot boast of high deposit interest rates. Furthermore, the interest rate is sometimes negative – you pay the bank interest, not the other way.
Despite their high volatility, cryptocurrencies appear to be far more appealing in terms of long-term investment. Periods of depreciation are more than offset by periods of growth, due to its deflationary nature and growing popularity as a store of value.
Let us clarify that not all cryptocurrencies, but primarily bitcoin, have this quality.
On DeFi networks, “staking” and “yield farming” allow you to earn passive income. DeFi is a term for decentralized finance for blockchain-based currencies and smart contracts.
Staking and yield farming are fundamentally the same. They involve investing in one or more cryptocurrencies and collecting interest and commissions from blockchain transactions.
- Staking. Cryptocurrency must be stored in an account in order to earn interest and commissions when funds pass through validators, which are blockchain nodes that keep the network running. Stakeholders receive a portion of the commission when validators participate in transaction execution.
- Yield farming. This method is slightly more complicated, but not significantly different. Users contribute funds to the liquidity pool, frequently by combining different types of tokens. Rewards are accrued continuously and are typically paid in the form of crypto tokens. Tokens collected can be re-invested in the liquidity pool and added to the farm to earn higher rewards. They can also be withdrawn and exchanged for cash.
Compound Crypto Interest
The annual yield on principal and interest on investments or savings is referred to as the APY. The amount of compound interest applied, which can vary, also influences the calculation of APY.
Compound interest is a type of capital gain (interest) situation in which the income from each period is reinvested. As a result, economic income is generated from both the initial investment and the profits made in each previous period.
The profit earned in the first period is applied to the initial investment, resulting in an increasing profit in each subsequent period. Thus, compound interest produces a multiplier and exponential effect on the initial investment.
DeFi Benefits
- Easy access to financial services, particularly for those who are unable to access the current financial system for whatever reason.
- A smart contract contains the rules for carrying out business operations. Once activated, the DeFi app can function autonomously with little or no human intervention.
- Control of the ecosystem is distributed evenly among all network members.
- Transactions are completed quickly and without the use of an intermediary, lowering commission costs.
- The source code of applications is available for study, allowing any user to understand the contract’s functionality or identify vulnerabilities.
- Anyone can create and use an application. Other products can be combined to create new services.
- Unlike the traditional financial sector, there are no controllers or accounts that require complex forms to be filled out.
Crypto Asset Management Companies
Midas.Investments is a CeDeFi custodial investment platform that provides the best market returns across a variety of cryptocurrencies. We want to use the crypto economy to help people achieve financial independence. The site provides trust management of a portfolio of popular digital assets for these purposes.
Midas offers two automated yield portfolios, each with a basket of selected cryptocurrencies that are rebalanced monthly to optimize yield. The Midas token offers 22.2% APY, which is backed by Midas’ income stream and universal utility, isolating it from market volatility.
