As global investors get more familiar with cryptocurrencies, the focus of related investor news has begun to change.
In the beginning, a lot of the focus was on the assets themselves – what to buy, when to buy it, and most importantly, how these digital assets work.
Now that many investors on the vanguard of cryptocurrency markets have learned a lot of these things, there are new types of strategies that experts are recommending, and many of these come into play in a sophisticated cryptocurrency or blockchain investment strategy.
One of the main ones is around decentralized finance and new lending potential.
New developments in decentralized finance and crypto wallet features allow investors to earn relatively high interest rates on their assets as they hold them – interest rates that are much higher than the average interest earned on the dollar as a fiat currency in depositor banks!
Crypto Interest-Earning Options and How They Work
Investors have a lot of choices in how they approach earning interest-based yields on crypto assets.
Some exchanges are offering their own internal programs – for instance, Binance allows investors to get up to 10% on some assets – and tertiary financial service providers like Cred and BlockFi offer their own systems as well.
Here’s part of how that works – as there is more institutional and business interest in crypto, the companies offering the interest rates can put that capital out into the world in an efficient way, through the power of decentralized finance, and bring the savings back to the wallet holders in terms of earned interest.
“The crypto industry is in growth mode,” writes a BlockFi spokesperson in a post describing the practice of setting up these groundbreaking platforms. “Businesses are building and investors are looking for ways to accumulate more capital. BlockFi Interest Account clients can deposit their crypto and earn interest. Paid out at the beginning of every month, the interest earned by account holders compounds, increasing the annual yield for our clients. This is an easy way for crypto investors to earn bitcoin while they HODL.”
Essentially, too, the company’s can overcollateralize the crypto loans to lower the risk of defaults and use other efficiencies to further increase available interest to their investors. So the structural realities around digital blockchain assets fundamentally change what’s possible in terms of asset (interest-based) dividends. That’s important for interested investors to know – because they continually look for solid reasons to value digital coins like BTC over the dollar. This is a big one!
HODLer’s don’t have to sell their crypto to earn – Source: Cred
Creating Partnerships in the DeFi World
In addition to exchange operations and third-party options, some exchanges are partnering with those independent companies to get wallet holders the interest rates and gains that they want.
This announcement from Edge about its secure wallet technologies and its partnership with Cred is just one of the newest of these joint ventures that will allow investors to optimize their yields over time. This particular choice blends the edge security of the wallet provider, which is a big value, with the amazing interest rates that Cred is able to generate for investors. Look for its 10% rate information on the web site.
According to Dan Schatt, CEO of Cred: “Most wallets have realized by now, that if they’re not offering something that allows customers to earn interest, customers are going to move into a wallet that does. Over the next year or two, I believe everyone will want to offer interest to their customers, and that’s where Cred comes in.”
With all of this rapid enterprise activity around DeFi lending, the market itself has boomed – according to BlockCrypto reports, the overall cryptocurrency lending sector is worth $5 billion, with two companies, Celsius and Genesis, sharing 65% of all relevant loan originations.
Here’s the bottom line – crypto investors should know that these opportunities are out there. If you’ve made the effort to buy and hold a cryptocurrency and do all of the crypto tax accounting and everything else that’s involved, you owe it to yourself to be getting gains off of those assets. Sure, many people are holding Bitcoin because they think it will double, or triple, or increase its value to the tune of 1000% over a couple of years, but that’s no reason they shouldn’t be also getting high rates of interest – as the icing on the cake. Keep an eye on these extremely advantageous crypto investment moves for 2020 and beyond.
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