Almost everyone who hasn't completely jumped into the crypto pool has the same question: how to make money with cryptocurrency? Some thought they would have to purchase and sell crypto to start living off it. It's actually a sad route, for it will lead you to loss. Luckily for you, we will take you to explore a much better course to start earning from crypto.
4 Ways to Make Money with Crypto in DeFi
One of the best ways to start earning income with cryptocurrency is through DeFi or Decentralized Finance. In short, it's a crypto term to indicate that your asset is not controlled by anyone. It's you who have complete control over your money.
You have control over your own money, and you can move it without waiting for anyone's approval. It's not even uncommon to see a DeFi offer around 30% rates. Isn't that a promising platform to invest in? Below we have compiled four methods to start earning with cryptocurrency through DeFi. Let's jump right in!
The first way to start earning additional income in DeFi is by letting other people borrow your crypto. You will get three benefits by lending with a solid DeFi project. First, they will almost certainly offer higher rates compared to conventional finance. The reason for that is because everyone can access it, and more and more money is being invested in DeFi projects.
Lending in DeFi also provides you with complete control over your own money. No one can ever step in your money, not even the government unless you are forced to do it. If someone wanted to transfer your funds, they would need your private keys. As long as you keep your private keys to yourself, no one can access your asset but you.
It's worth noting that DeFi loans are also all collateralized, meaning a borrower must first make a higher deposit before borrowing your crypto. That way, as a lender, you will always have access to your borrower's initial deposit should a crisis happen.
If the amount people borrowed from you is less than their initial deposit, the borrower will be liquidated. This means you will own their first deposit, and the borrower will keep the borrowed money. The rates your borrowers pay you are your income as a lender.
2. Become a provider of liquidity
The next method to make money with cryptocurrency is by becoming a liquidity provider. How does it work? First of all, you give your money to DeFi. You will start earning money from collecting a fee that each trader pays when they want to trade. While it sounds tempting, it's actually a bit risky. Yet, there are three least risky ways you can do it.
The first safest way is by providing two stablecoins, like depositing USD Coins with Tether together. Ideally, both tokens' prices should always be $1, meaning your initial deposit's value will remain consistent. You won't lose your initial deposit in the event of a crypto crash.
The next way is by choosing strongly correlated assets, of which you can provide liquidity. That way, you can generate trading fees while maintaining access to these currencies. For instance, you can deposit in Bitcoin, Ethereum, and stablecoins with 33% for each to start earning fees from traders.
Finally, suppose you want to really earn some insane fees in DeFi. In that case, you need to provide liquidity to considerably high-risk coins. While the fees you will get are usually unprecedented, the possibility of you losing a lot of value in one of the coins is high as well.
3. Collecting Incentives
This one is probably the simplest way of making money with cryptocurrency. The point is you should really know about it. Let's just picture you are appointed to promote a DeFi platform to be eligible to earn some incentives. The question is, how would you execute it?
You could purchase a billboard and advertise the platform. Yet, it might not work really well since most people who see the billboard have no idea what crypto is. Of course, you could advertise the DeFi on the internet. However, there have been numerous crypto scams from 2017 to 2018. That is why many websites today don't allow crypto-related ads. So, what would you do?
The best alternative is to use the advertising budget and give it to crypto enthusiasts to encourage them to start using your platform. That way, they will tell other crypto fans to also start using your network to acquire the money. You can also be one of those people who are trying out a new DeFi platform to obtain free money.
Airdrops are included in one of the ways of making money by trying out DeFi platforms. To better understand, let's say there's a new company that wants to go public. They have shared, and people who purchase the stocks have access to the platform's profits. More importantly, they have a say in the company's decisions. In the crypto world, those stocks are tokens.
So, suppose you own a large number of the tokens. In that case, you will receive a portion of the platform's profits as well as the ability to influence the platform's future decisions. There is one platform that launched a new token. Rather than selling it, they gave tokens to those who have used their platform.
That's precisely what an airdrop is; people who utilized a DeFi platform prior to a specific date are eligible to receive free tokens. This is a promising method that you can give a try to make free money with crypto. Yet the thing is, you should sell those free tokens when the price spikes up. Only during the peak will you earn a lot.
What is a Cryptocurrency Airdrop? Here Are the Facts
To Wrap Up
There is so much money right now that is flowing into crypto. You can certainly make some decent income by employing one of the methods on how to make money with the cryptocurrency above. However, as more people enter the market, the rates will decline, and the number of scams will increase. These are things you need to consider before doing any of the methods above.