Centralized Lending and Staking
As mentioned above, you can lend your cryptocurrency to centralized services. There are several pros and cons to lending to centralized services. For example, you are completely giving over the access to the funds. Ultimately this means that if they make a mistake with the management of your capital, you could face untimely losses. As a general rule, it is best not to put all of your eggs in one basket.
Binance, Crypto.com, and BlockFi
There are three centralized lenders worth mentioning, they are Binance, Crypto.com, and BlockFi. Not only does it matter which coin you’re staking, it matters where you’re staking. Since there are no decentralized lending protocols for bitcoin, these companies may offer it interest on your bitcoin, with amazing rates.
If you are comfortable lending your bitcoin then this is easily one of the best coins to stake right now. Every satoshi counts. The rates that you can earn on the various centralized services are actually quite high, as much as 6.5% on Crypto.com, and 6% on BlockFi. The other option is wrapping your bitcoin on the Ethereum networking, and lending wBTC to a decentralized protocol like UniSwap. Both strategy have their risks, therefore there is the potential for total losses, as well as modest gains.
There is a very wide variety of ways to stake your CRO, and earn interest on your CRO. The company behind CRO is Crypto.com, and they are building a cryptocurrency ecosystem with CRO as the lifeblood. The token empowers their offerings and locks users CRO into their applications for up to 20% APY. Here is a brief list of their staking offerings.
- Crypto.com Exchange Staking: 20% for a 6 Month Term
- Crypto.com VISA Debit Staking: Up to 18% for 6 Month Term + VISA Debit Card
- Crypto.com Earn Lending: 14%, 16%, 18% for flexible, 1 month, or 3 month terms
- Crypto.com DeFi Lending: Dynamic Decentralized Payouts, Rates Vary
Due to the sheer number of ways to utilize the CRO token in the Crypto.com ecosystem, it is a coin worth paying attention to.
DAI, USDT, and Stablecoins
Stablecoins have become one of the most highly utilized type of coin in the cryptocurrency industry. They provide a real benefit for the user, and that is an asset to move funds into, that is resistant to volatility. Since there is a high demand for these coins, the lending rates for stable coins can be quite good. On Crypto.com, you can get as much as 12% on your stablecoins. On Binance, that number is 7%, however Binance has a really interesting variety of lending options. Some of these options are completely unique that you cannot get anywhere else. Then of course lending your stablecoins to DeFi is very popular, and profitable if done correctly. Timing gas fees may need to be a key part of your strategy.
It almost seems like Binance and Crypto.com along the same dimensions. But Binance is such a goliath, it is hard to tell if Crypto.com will ever catch up. Binance is a hyper interesting platform for several reasons. The sheer variety of ways you can participate in the crypto economy on Binance is staggering. They have fully fleshed out mining accounts, staking accounts, savings accounts and more. Most if not all can be enabled by using the funds in your Binance wallet. When you stake BNB though, the deal is structured in a unique way. The interest rate can be quite high (50% APY), but it is ultimately able to be pulled off because you’re being paid the interest in a variety of coins. Typically these projects are new, and thus are using BNB staking as a means of distributing their initial set of tokens.
Polkadot, Cardano, and Tezos
These projects bring something else to the table as each of them are their own separate project. When you stake these tokens, you are participating in these networks proof of stake models. Each of them have the potential to build DeFi hubs of their own to compete with Ethereum, which is why they are on this list. Even though interest rates for these networks are around 4-8%, they are coins worth paying attention to. Ethereum has yet to transition to a POS model, and so is causing high gas fees and transaction latency. The longer this goes on, the better chance networks like Polkadot, Cardano, and Tezos have in dethroning Ethereum. If you’re interesting in staking that is safe, and more decentralized, then these projects are worth taking a look at. The benefit of staking directly on a decentralized network are unmistakable.
A Few Words on Staking
There is nothing wrong with good old HODLing in a cold storage wallet. Staking is inherently a riskier way of engaging in cryptocurrency due to the volatility of funds, and the access you revoke when using centralized staking or lending services. Staking should be done with the full knowledge that all of your money can be lost if the underlying contract maintainer, or service provider fails to deliver on their promises. Engaging in a POS blockchain to earn interest is slightly less risky, as you do in fact own your keys. However, some blockchains have vesting periods that add a latency to withdrawing your funds. This can be problematic when you want to sell your tokens on a moments notice. Regardless, staking is a great way to earn a bit of passive income, as well as engage in crypto.