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 initiatives come and go, and the promised utility of those “real-world use case” initiatives 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.
Right here’s a take 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 because the 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 typically supply larger rewards in an effort to draw liquidity.
Just lately, the crypto lending discipline has expanded into realms which are sometimes dominated by conventional finance. That is very true for actual property, the place quite a few experimental cryptocurrency-based mortgage and itemizing platforms are making headway.
Platforms like Vesta Fairness and the newly launched USDC.houses supply crypto holders the chance to collateralize their property 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 combination 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.
Bipartisan invoice to present CFTC authority over exchanges and stablecoins
No-loss token choices
One other strategy to “use” cryptocurrency is by collaborating 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 this sort of protocol launch, traders eager about supporting a challenge can lock up DOT or KSM for a specified time frame as a type of collateral backing for the challenge.
Contributors obtain the native token of the newly launched protocol In alternate for locking their funding within the challenge’s good contract. After the designated lock-up interval is full, the overall steadiness of tokens is returned to the contributor, which means they keep their authentic holdings whereas additionally including new property to their portfolio.
Lockdrops are one other instance of this sort of no-loss token providing. One was just lately employed through the launches of Astroport and Mars Protocol.
Lockdrops have additionally been known as airdrops as a result of they technically don’t assist initiatives increase funds, relatively they require some degree 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 challenge 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 degree. 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 selection of what token they wish to accumulate as a reward.
Need extra details about buying and selling and investing in crypto markets?
The views and opinions expressed listed below are solely these of the writer and don’t essentially mirror the views of Cointelegraph.com. Each funding and buying and selling transfer entails threat, it is best to conduct your personal analysis when making a call.
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