Here are 3 ways hodlers can profit during bull and bear markets
For years, cryptocurrency advocates have touted the world-changing capability of digital currency and blockchain technology. Yet with the passing of each market cycle, new projects come and go, and the promised utility of these “real-world use case” projects fails to satisfy.
While a majority of tokens promise to solve real-world problems, only a few achieve this, and the others are mere speculative investments.
Here’s a look at the three things cryptocurrency investors can actually “do” with their coins.
Lending
Perhaps the simplest use case offered to cryptocurrency holders is also one of the oldest monetary applications in finance: lending.
Ever since the decentralized finance (DeFi) sector took off in 2020, the opportunities available for crypto holders to lend out their tokens in exchange for rewards have multiplied.
Blue-chip DeFi protocols like Aave, Maker and Compound offer reasonable yield on stablecoins, and lesser-known protocols often offer higher rewards in an effort to attract liquidity.
Recently, the crypto lending field has expanded into realms that are typically dominated by traditional finance. This is especially true for real estate, where a number of experimental cryptocurrency-based mortgage and listing platforms are making headway.
Platforms like Vesta Equity and the newly launched USDC.homes offer crypto holders the opportunity to collateralize their assets to obtain a mortgage or lend them out to aspiring home buyers in exchange for long-term yield.
Stablecoin farming
Another way to put the hodl bag to use 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 function properly, and the integration of stablecoins on centralized and decentralized exchanges has helped the market mature and stay sufficiently liquid.
Platforms like Curve Finance, Beefy Finance and Trader Joe offer yield on stablecoin liquidity pools, and rates can reach as high as 20% APY.
Related: Bipartisan bill to give CFTC authority over exchanges and stablecoins
No-loss token offerings
Another way to “use” cryptocurrency is by participating in the no-loss token offerings launching across the ecosystem.
An example of a no-loss token offering 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
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