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How do people make money from cryptocurrency

I saw Many of the Super Bowl ads are related to cryptocurrency, and you may find them strange, dystopian, or annoyingly familiar. However, maybe you think the blockchain has financial rewards left to reap and want to jump in, or you’ve already restricted some of your money in cryptocurrencies via companies like Coinbase and FTX that were advertising during the big game.

What now? Tracking the rise and fall of Bitcoin, Ethereum and other cryptocurrencies and actively trading these fluctuations can be a full-time job. Day trading, basically. And still jumping into NFTs, digital trinkets that you can mint, buy or sell, is a daunting task for many.

For the many cryptocurrency traders who are in it for the medium to long term, there are a few other ways to make money from the cryptocurrencies in your crypto wallet: stacking and cultivating returns on DeFi networks. “DeFi” is just an umbrella term for “decentralized finance” – pretty much all services and tools built on the blockchain for currencies and smart contracts.

In its simplest form, cryptocurrency hoarding and yield farming are pretty much the same thing: it involves investing money in a cryptocurrency (or more than one at a time) and collecting interest and fees from blockchain transactions.

Foreplay vs Crop farming

Simple staking. It usually involves holding the cryptocurrency in an account and allowing it to collect interest and fees as these funds are obligated to the blockchain auditors. When blockchain validators facilitate transactions, the fees generated partly go to the stakeholders.

This type of interest retention has become so popular that major cryptocurrency traders such as Coinbase are offering it. Some tokens, such as the highly stable USDC (which is pegged to the US dollar), offer annual interest rates of around 0.15 percent (not much different than putting your money in a bank in a low-interest checking account), while other cryptocurrencies may offer you earn 5 or 6 percent per year. . Some services require funds to be frozen for a certain period of time (which means you cannot deposit and withdraw whenever you want) and may require a minimum amount to withdraw interest.

Cultivation of yields is a little more complicated, but it is not that different. Revenue growers add funds to liquidity pools, often by pairing more than one type of token at a time. For example, a liquidity pool that pairs Raydium token with USDC might generate a token that can generate an APR of 54 percent (Annual Percentage Rate). This sounds absurdly high, and gets even more bizarre: some of the newer and highly volatile tokens may be part of crop farms offering hundreds of yearly percentage of annual rates and 10,000 to 20,000 APY (similar to APY APR but takes compound consideration) .

The rewards, which add up to 24/7, are usually paid out as crypto tokens to be earned. Those harvested coins can be reinvested in the liquidity pool and added to the yield farm for bigger and faster rewards, or they can be withdrawn and converted into cash.

How do people make money from cryptocurrency

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