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 know-how. 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 be one of many oldest financial purposes 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 provide cheap yield on stablecoins, and lesser-known protocols usually provide greater rewards in an effort to draw liquidity.

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

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

Stablecoin farming

One other technique to put the hodl bag to make use of is by farming stablecoins. The cryptocurrency market is well known for its high volatility and high-risk trades, but earning a yield on stablecoins is a safer way to grow a portfolio without the downside risk 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 provide yield on stablecoin liquidity swimming pools, and charges can attain as excessive as 20% APY.

Associated: Bipartisan bill to give CFTC authority over exchanges and stablecoins

No-loss token choices

One other technique 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 occur on the Polkadot and Kusama networks. In this type of protocol launch, investors interested in supporting a project can lock up DOT or KSM for a specified time frame as a type of collateral backing for the mission.

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

Lockdrops are one other instance of the sort of 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 initiatives elevate funds, reasonably 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 mission throughout its preliminary launch.

The Astroport launch concerned a novel liquidity bootstrapping section the place contributors might present liquidity pool pairs in alternate for a better reward degree. Upon lockup, a one-time lockdrop reward is distributed to contributors 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 value 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.

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The views and opinions expressed listed here are solely these of the writer and don’t essentially replicate the views of Cointelegraph.com. Each funding and buying and selling transfer entails danger, it’s best to conduct your personal analysis when making a choice.