Welcome to this publication about 3 Smart ways to earn interest on crypto via Afrokonnect.
If you want to hold on to your cryptocurrency for a while, you might consider earning income from them.
Passive income can be generated by earning interest on cryptocurrency assets, and if the markets climb, your earnings will be compounded.
On some exchanges, you can open an interest-bearing (savings) account and get paid in cryptocurrency.
Interest rates alter by cryptocurrency. Learn how to make money by earning interest from cryptocurrency with our guide.
Steps to Gain Cryptocurrency Interest – Earn interest on crypto
1. Start a cryptocurrency wallet
Sign up for a service that pays interest on cryptocurrency reserves.
2. Examine the market to find the best interest rate.
You may compare crypto interest rates online. It’s possible that your interest rate will differ from one cryptocurrency investment to another, despite you are both using the same crypto.
These accounts have variable interest rates. Interest rates on crypto loans would so fluctuate instantly in response to market conditions.
Stablecoins offer 6-9% interest. Some crypto ventures yield 100% returns.
These eye-popping rates should warn of crypto inflation and leveraged holdings.
If you’re new to crypto, avoid too-good-to-be-true offerings.
3. Collect interest on your investments
As soon as you add money to an account that has an interest-bearing function, you’ll soon begin to accumulate interest.
Individuals who believe Bitcoin as well as other cryptocurrencies will maintain their value are interested in earning interest on their investment.
This is due to cryptocurrencies’ rising popularity.
If bitcoins doubled in value during the year, an investor who bought $30,000 worth at the start would have earned $60,000 in interest.
Investing $60,000 in bitcoin at 7% returns twice as much as the initial investment.
Bitcoin, Litecoin, Ethereum, and Uniswap are well-known cryptocurrencies that provide investors returns.
You may keep your finger on the market’s pulse by keeping some of your cryptocurrencies in an interest-earning account and withdrawing the interest in cryptos.
Crypto investments that generate interest can reduce investors’ risk. Many firms also provide stablecoin savings accounts.
Stablecoins are digital currencies tethered to a steady value, usually the dollar.
Changing market conditions affect cryptocurrency interest rates,
Although annual percentage yields (APRs) vary, most larger coins have consistent APRs. Interest rates of Bitcoin range 4% – 8%.
Stake your cryptocurrency for interest
Staking helps crypto holders earn interest. Also, it helps protect crypto with proof-of-stake consensus method like Cardano (ADA), Polkadot (DOT) and Solana (SOL).
Your Staked cryptos are held by the reliable cryptocurrency protocol.
In this capacity, stakers can act as validators by establishing a validation node.
The protocol chooses validators from eligible nodes to confirm transactions.
The validator of each transaction block included into the blockchain is given a small amount of newly minted cryptos as payment.
Get interest by lending crypto
Besides staking, investors can take an interest profit from crypto loans.
Some loan account interest rates are fixed, like typical deposit certificates (CDs), while others are variable.
Earning Cryptocurrency Interest: Where to Invest
To stake cryptocurrency, investors might utilize an exchange or a wallet.
Depending on the cryptocurrency and staking platform, investors’ returns may differ.
Gemini, Kraken, KuCoin and Coinbase are popular crypto exchanges.
Even if the market for crypto lending is unpredictable, crypto investors still have a number of possibilities.
Due to liquidity issues caused by the crypto winter in recent time, some famous crypto lending names like Voyager Digital, Celsius and BlockFi have frozen their customers’ balances.
Voyager Digital filed for the bankruptcy and BlockFi is under review after a major client got trouble with excessive collateral loan (fail to satisfy the obligations relating to margin call of this loan).
Interest Earnings in Crypto: Advantages and Disadvantages
Earning Cryptocurrency interest has both pros and cons.
First let’s talk about the advantages, crypto lending and crypto staking offer higher interest rates than U.S. Treasuries also high- yield interest-bearing accounts.
Crypto interest rates have higher yields than large number of U.S. stocks.
Long-term investors who want passive income can stake or lend cryptocurrency.
Crypto’s power can rise over time due to interest compounding, which can be reinvested to boost returns.
The most significant downside of Cryptocurrency interest earning is lending and staking.
Most user accounts are not under insurance when participating in lending platforms or crypto exchanges.
Cryptocurrency is unregulated and not under FDIC insurance which is a government-back deposit insurer.
In opposition, savings and CDs of FDIC-member institutions are protected up to $250,000 for each account.
The government also guarantees the interests relating to U.S. Treasuries whenever the country endures its solvency.
Cryptocurrency’s extreme volatility also presents issues,
Even at 10% or higher interest, crypto investors have lost a lot this year.Bitcoin is 56% down while Ethereum sank 67%.
Conclusion
Richard Gardner, CEO of Modulus Global says crypto loan risks go beyond market volatility.
According to Gardner, high rates of interest on crypto loans may indicate risk. He said Celsius’s collapse is a typical illustration of risk recklessness.
