For years, cryptocurrency advocates have touted the world-changing functionality of digital foreign money and blockchain expertise. But with the passing of every market cycle, new initiatives come and go, and the promised utility of those “real-world use case” initiatives fails to fulfill.
Whereas a majority of tokens promise to unravel real-world issues, only some obtain this, and the others are mere speculative investments.
Right here’s a have a look at the three issues cryptocurrency traders can truly “do” with their cash.
Maybe the only use case supplied to cryptocurrency holders can be one of many oldest financial purposes in finance: lending.
Ever for the reason that decentralized finance (DeFi) sector took off in 2020, the alternatives obtainable for crypto holders to lend out their tokens in change for rewards have multiplied.
Blue-chip DeFi protocols like Aave, Maker and Compound supply affordable yield on stablecoins, and lesser-known protocols typically supply greater rewards in an effort to draw liquidity.
Lately, the crypto lending discipline has expanded into realms which can be sometimes dominated by conventional finance. That is very true for actual property, the place a lot of experimental cryptocurrency-based mortgage and itemizing platforms are making headway.
Platforms like Vesta Fairness and the newly launched USDC.homes supply crypto holders the chance to collateralize their belongings to acquire a mortgage or lend them out to aspiring residence consumers in change for long-term yield.
One other method to put the hodl bag to make use of is by farming stablecoins. The cryptocurrency market is well known for its high volatility and high-risk trades, but earning a yield on stablecoins is a safer way to grow a portfolio without the downside risk of investing in Bitcoin (BTC) and altcoins.
In bull and bear markets, liquidity is required for DeFi protocols to operate correctly, and the mixing of stablecoins on centralized and decentralized exchanges has helped the market mature and keep sufficiently liquid.
Platforms like Curve Finance, Beefy Finance and Dealer Joe supply yield on stablecoin liquidity swimming pools, and charges can attain as excessive as 20% APY.
No-loss token choices
One other method to “use” cryptocurrency is by collaborating within the no-loss token choices launching throughout the ecosystem.
An instance of a no-loss token providing is the parachain auctions that occur on the Polkadot and Kusama networks. In this type of protocol launch, investors interested in supporting a project can lock up DOT or KSM for a specified time frame as a type of collateral backing for the undertaking.
Contributors obtain the native token of the newly launched protocol In change for locking their funding within the undertaking’s sensible contract. After the designated lock-up interval is full, the full steadiness of tokens is returned to the contributor, which means they preserve their authentic holdings whereas additionally including new belongings to their portfolio.
Lockdrops are one other instance of one of these no-loss token providing. One was just lately employed in the course of the launches of Astroport and Mars Protocol.
Lockdrops have additionally been known as airdrops as a result of they technically don’t assist initiatives increase funds, slightly they require some degree of dedication for future use from token recipients. Whereas airdrops simply distribute tokens to customers who opt-in, lockdrops require events to decide to locking up some liquidity that may be utilized by the undertaking throughout its preliminary launch.
The Astroport launch concerned a novel liquidity bootstrapping part the place contributors may present liquidity pool pairs in change for the next reward degree. Upon lockup, a one-time lockdrop reward is distributed to contributors to carry, commerce or use to supply liquidity.
Liquidity suppliers additionally obtain buying and selling charges and different incentives relying on the liquidity pool they’re in as a method to enhance the chance value of offering that liquidity.
As soon as the agreed-upon lockup interval is full, customers are free to take away the liquidity.
No loss token choices give long-term crypto holders an opportunity to earn tokens for newly launched protocols in change for yield and a alternative of what token they want to accumulate as a reward.
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