Large price jumps and 100x gains get a lot of attention from pundits and influencers in the cryptocurrency community because they offer the hope of overnight riches.
In reality, these opportunities are few and far between. Not to mention, only a handful of traders actually manage to catch these waves and cash out in time to lock in life-changing money.
Fortunately, catching a large price surge is far from being the only way for crypto investors to make a buck, and the recent rise of decentralized finance (DeFi), nonfungible tokens (NFTs) and the slow march of mainstream crypto adoption provides a near endless stream of investment opportunities.
Let’s have a look at five different ways crypto holders can make an easy buck without actually having to trade.
Staking, which rewards users for locking tokens on a protocol as collateral for transaction validation, is one of the best ways to earn a yield on assets held in a crypto-based portfolio.
In August, the Ethereum network will switch from a proof-of-work (PoW) consensus model to a proof-of-stake (POS) model, and Ether (ETH) holders who stake in the Eth2 contract can earn up to 5.83%.
Under this new PoS system, token holders actively participate in transaction validation by locking their coins in nodes on the network that then vie for a chance to verify transactions, create new blocks and receive the rewards that come along with it.
Data from Staking Rewards shows that a stake of 10 Ether currently results in a weekly earning of 0.0075 ETH, worth $17.96 at current prices, and a yearly earning of 0.3876 ETH which is currently worth $933.69.
Calculated staking rewards for Ether. Source: Staking Rewards
The percentage yield for Ether decreases as more tokens are locked on the network so the final earnings may change.
Currently, the top five crypto assets by staked value are Cardano’s ADA, Ether, Solana (SOL), USD Coin (USDC) and Polkadot (DOT).
Top 5 crypto assets by staked value. Source: Staking Rewards
All things considered, staking provides one of the best low-risk opportunities in crypto to gain a bigger stack regardless of market sentiment or performance, while also helping to support the network through transaction validation.
Lend crypto for low-risk yields
The growth of the DeFi sector led to the development of a diverse crypto lending ecosystem, where users can deposit their cryptocurrencies to various lending protocols in exchange for rewards in the underlying token or in different assets like Bitcoin (BTC), Ether and various altcoins.
Aave is the top lending protocol at the moment and the platform offers yield opportunities for tokens on the Ethereum and Polygon network with its native coin MATIC.
Top 7 Aave lending pools on the Polygon network. Source: Aave
The chart above shows the top seven lending pools available through the AAVE protocol on Polygon and rewards are paid in Wrapped MATIC (WMATIC), with the current deposit annual percentage yield (APY) being 1.92% and a yearly estimated APY of 6.1%.
Other top lending protocols include Curve (CRV), Compound (COMP), MakerDAO (MKR) and Yearn.finance (YFI).
Lending offers another low-risk way to earn a decent yield, in both bull and bear markets, on tokens that don’t offer user-controlled rewards like staking.
Earn fees and tokens from providing liquidity
Liquidity provision is one of the primary components of a DeFi platform, and investors who choose to provide funds to emerging platforms are often rewarded with high percentage returns on the amount staked, as well as a percentage of the fees generated by transactions within the pool.
Rewards for ETH-USDC liquidity pool on QuickSwap. Source: QuickSwap
As seen in the image above, providing liquidity to an Ether/USDC pool on QuickSwap will entitle an investor with a percentage of the $23,098 in total daily distributed rewards and a fee APY of 33.81%.
Ideally, long term investors would be wise to research the available pools on the market, and if a liquidity pair comprised of solid projects or even a stablecoin pair such as USDC/Tether (USDT) looks appealing, it has the potential to be the blockchain version of a savings account that offers far better yields than can currently be found in any bank or legacy financial institution.
Maximize returns by yield farming
Yield farming is the concept of putting crypto assets to work in a way that generates the highest yield possible while minimizing risk.
As new platforms and protocols emerge, they offer high incentives to depositors as a way of mining for liquidity and increasing the total value locked (TVL) on the protocol.
Rewards for STKGHST-WETH LP deposits on DinoSwap. Source: DinoSwap
The high yields offered are generally paid out in the native token of the platform as seen above, where a user has deposited a liquidity pool token for an STKGHS-WETH pair which has an APR of 189.2% and has so far generated a reward of 3.312 DINO.
For long investors who hold a portfolio filled with an assortment of tokens, yield farming is a way to gain exposure to new projects and obtain new tokens without having to spend new funds
Related: Here’s why DinoSwap’s (DINO) TVL rose above $330M a week after launch
NFT and blockchain gaming make ‘play-to-earn’ a reality
Blockchain gaming and NFT collecting is another way to produce a return on a crypto portfolio without spending new funds.
Axie Infinity is the most popular example at the moment, and the in-game play involves trading, battling, collecting and breeding NFT-based creatures known as Axies.
Playing Axie Infinity generates rewards in the form of Smooth Love Potion (SLP), an in-game token that is used in the Axie breeding process and also trades on major cryptocurrency exchanges. Users can swap SLP for dollar-based stablecoins or other large-cap cryptocurrencies.
According to data from Your Crypto Library, “Today, the average player earns between 150 to 200 SLP per day,” which, at current market value, is worth between $40 and $53.50.
In some parts of the world, that amounts to the income provided by a full-time job. For this reason, Axie Infinity has seen a massive uptick in user activity and new accounts in countries like Venezuela and Malaysia.
Crypto investing, lending, staking and play-to-earn blockchain games provide a much higher return on investment than traditional banks offer on savings and checking accounts. As the blockchain sector grows, it’s likely that investors will continue to flock to platforms that offer high yields for engaging with the protocol.
Want more information about trading and investing in crypto markets?
- Finding the sweet spot: Traditional financial institutions ready for DeFi
- NFT game creator flips Axie Infinity virtual land for 9,200% gain in one year
- How crypto can modernize the world of lending
- A green revolution in crypto mining? Industry answers wake-up call
- Here’s why DinoSwap’s (DINO) TVL rose above $330M a week after launch
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.