Here are 3 ways hodlers can profit during bull and bear markets

For years, cryptocurrency advocates have touted the world-changing functionality of digital foreign money and blockchain expertise. But with the passing of every market cycle, new tasks come and go, and the promised utility of those “real-world use case” tasks fails to fulfill.

Whereas a majority of tokens promise to resolve real-world issues, just a few obtain this, and the others are mere speculative investments.

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Right here’s a have a look at the three issues cryptocurrency traders can really “do” with their cash.

Lending

Maybe the best use case provided to cryptocurrency holders can also be one of many oldest financial functions in finance: lending.

Ever for the reason that decentralized finance (DeFi) sector took off in 2020, the alternatives obtainable for crypto holders to lend out their tokens in alternate for rewards have multiplied.

Blue-chip DeFi protocols like Aave, Maker and Compound supply cheap yield on stablecoins, and lesser-known protocols usually supply larger rewards in an effort to draw liquidity.

Just lately, the crypto lending subject has expanded into realms which are usually dominated by conventional finance. That is very true for actual property, the place various experimental cryptocurrency-based mortgage and itemizing platforms are making headway.

Platforms like Vesta Fairness and the newly launched USDC.properties supply crypto holders the chance to collateralize their belongings to acquire a mortgage or lend them out to aspiring house patrons in alternate for long-term yield.

Stablecoin farming

One other strategy to put the hodl bag to make use of is by farming stablecoins. The cryptocurrency market is well-known for its excessive volatility and high-risk trades, however incomes a yield on stablecoins is a safer strategy to develop a portfolio with out the draw back threat of investing in Bitcoin (BTC) and altcoins.

In bull and bear markets, liquidity is required for DeFi protocols to perform correctly, and the mixing of stablecoins on centralized and decentralized exchanges has helped the market mature and keep sufficiently liquid.

Platforms like Curve Finance, Beefy Finance and Dealer Joe supply yield on stablecoin liquidity swimming pools, and charges can attain as excessive as 20% APY.

Associated: Bipartisan invoice to provide CFTC authority over exchanges and stablecoins

No-loss token choices

One other strategy to “use” cryptocurrency is by taking part within the no-loss token choices launching throughout the ecosystem.

An instance of a no-loss token providing is the parachain auctions that happen on the Polkadot and Kusama networks. In any such protocol launch, traders enthusiastic about supporting a undertaking can lock up DOT or KSM for a specified time frame as a type of collateral backing for the undertaking.

Contributors obtain the native token of the newly launched protocol In alternate for locking their funding within the undertaking’s good contract. After the designated lock-up interval is full, the whole steadiness of tokens is returned to the contributor, that means they maintain their unique holdings whereas additionally including new belongings to their portfolio.

Lockdrops are one other instance of any such no-loss token providing. One was not too long ago employed in the course of the launches of Astroport and Mars Protocol.

Lockdrops have additionally been known as airdrops as a result of they technically don’t assist tasks elevate funds, fairly they require some stage of dedication for future use from token recipients. Whereas airdrops simply distribute tokens to customers who opt-in, lockdrops require events to decide to locking up some liquidity that may be utilized by the undertaking throughout its preliminary launch.

The Astroport launch concerned a novel liquidity bootstrapping section the place contributors may present liquidity pool pairs in alternate for a better reward stage. Upon lockup, a one-time lockdrop reward is distributed to members to carry, commerce or use to offer liquidity.

Liquidity suppliers additionally obtain buying and selling charges and different incentives relying on the liquidity pool they’re in as a method to enhance the chance price of offering that liquidity.

As soon as the agreed-upon lockup interval is full, customers are free to take away the liquidity.

No loss token choices give long-term crypto holders an opportunity to earn tokens for newly launched protocols in alternate for yield and a alternative of what token they want to accumulate as a reward.

Need extra details about buying and selling and investing in crypto markets?

• Vesta Fairness and Algorand breathe new life into actual property tokenization
• Seeking to take out a crypto mortgage? Right here’s what you could know
• Web3 options purpose to make America’s actual property market extra accessible
• Decentralized finance: The perfect methods to take part and function
• Decentralization ‘completely important’ in constructing crypto capital markets

The views and opinions expressed listed here are solely these of the creator and don’t essentially mirror the views of Cointelegraph.com. Each funding and buying and selling transfer includes threat, you need to conduct your individual analysis when making a call.