Through the history of blockchain technology and cryptocurrencies, new projects are continually being churned into the cryptospace and new opportunities present themselves every other day. However, the diversity made possible by open-source blockchain such as the Ethereum network through which decentralized finance (DeFi) products abound has made it possible for crypto enthusiasts to earn income in the space.
Some of these modes of earning include but not limited to HODLing of digital currencies, staking cryptocurrencies, and getting returns from Lending provisions offered by unique DeFi platforms.
These three are profiled below;
HODLing: A Game for The Patient Investors
HODL is a crypto-engineered acronym for Hold on For Dear Life and is used to prompt crypto holders or investors to resist panic selling, especially in the advent of extreme market volatilities. HODL can also be used to describe the long-term holding potential of cryptocurrency investors. As an example, those who bought Bitcoin when it was below $100 and have refused to sell to date can be said to be HODLing. With the potential of crypto to grow over time, HODLing some coins with great fundamentals may be very profitable.
Staking: A DeFi-backed Multifaceted Earning System
There are blockchain systems that are built to work via the Proof-of-Stake (PoS) model. Here, a distributed consensus mechanism is achieved in which anyone can validate transactions by holding a certain amount of the underlying cryptocurrency or token.
The catch with PoS is that validators stake their coins, locking them for a defined length of time to help run the system, and they get yields on their staked coins. Different coins have different Annual Percentage Yields (APYs) and as such, the profitability of any staking offering is dependent on the APY on offer by the coin.
Lending: Crypto Enable Earning on Loan Products
With lending, anyone can provide liquidity to enable others to borrow supported cryptocurrencies. The liquidity providers earn yields based on the interest payment made by the lenders, and the percentage yield varies across platforms providing such services.
Preferred Option Amongst the Trio
The end goal and risk tolerance of an investor can determine which of the three earning models to embrace. While the three earning systems are being harnessed today, it is difficult to determine which is the best owing to different factors including the cryptocurrency in question, the platform offering the staking, and lending service, as well as general market conditions.
