Keeping in mind the highly volatile natures of cryptocurrencies, we can say that investments in cryptos are a kind of do-or-die situation. There can be huge profits through the investment, and there can be considerable losses as well.
The prices of cryptocurrencies can change very quickly with time which makes it a risky investment also. But, the fact is that if you are just holding some assets, it will not earn you anything by sitting idle in your wallets. Instead, you can generate some passive income out of it using the methods listed ahead.
Bitcoin lending
Crypto lending or Bitcoin lending is a method to generate passive income. There are many peer-to-peer crypto lending platforms where you can lend Bitcoin or other cryptocurrencies to businesses or professional traders who need funds.
It is possible that you must have accumulated a considerable amount of digital assets. But, what if do you need some physical money? Will you sell your holdings? Crypto lending is also a better option instead of selling your assets when you need money. The crypto market is doing great since the previous year, and selling your assets at this point time might not be a great idea.
Coming to the point, i.e., Bitcoin Lending or crypto lending, you can borrow physical money by lending your assets. Interestingly, you can simply earn passive income on your holdings because the investors will pay you interest in the return of your digital asset.
If you are still not clear with the concept, let’s understand it with an example. Let’s say you have 5 BTC (or any other crypto like ETH, XRP, BNB). If you deposit these Bitcoins on a crypto lending platform, you will receive interest on them. The interest rates could range from 3% to more than 10%, depending upon the type of assets. So, in this way, you can simply generate a passive income (weekly or monthly) on your holdings of 5 Bitcoins, and you are not required to sell your holdings.
The use of lending platforms is significant because they reduce the risks of non-repayment of loans by borrowers.
Defi Lending
DeFi lending is also a crucial way to generate passive income by using crypto assets. We are already aware the Decentralized finance is based on blockchain and works without the intervention of a third party.
The difference between traditional lending and Defi lending is that the latter is based on blockchain technology and thus, offers many unique features compared to conventional lending.
Using Defi, anyone can become a lender and can loan their assets to other people, thus, generating interest on the loan. For this purpose, lending pools can be used, where users can pool the assets and be distributed to the borrowers via smart contracts.
Defi Lending provides you with greater consistency in the lending decisions, and it is immutable, interoperable, and transparent. Certain popular Defi Lending platforms include Aave, Compound, and Maker. Among these, Aave is the most popular protocol, which is non-custodial.
In a nutshell, it is now possible to earn income out of your holdings. Just don’t let it stay idle in your wallets; use it to make interest every month.
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Source: https://medium.com/geekculture/earn-income-on-your-crypto-assets-regardless-of-the-market-movements-6622872317e2?source=rss——-8—————–cryptocurrency
