For years, cryptocurrency advocates have touted the world-changing functionality of digital forex and blockchain expertise. But with the passing of every market cycle, new tasks come and go, and the promised utility of those “real-world use case” tasks 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 buyers can truly “do” with their cash.
Maybe the best use case provided to cryptocurrency holders can also be one of many oldest financial functions in finance: lending.
Ever for the reason that decentralized finance (DeFi) sector took off in 2020, the alternatives accessible for crypto holders to lend out their tokens in change for rewards have multiplied.
Blue-chip DeFi protocols like Aave, Maker and Compound provide cheap yield on stablecoins, and lesser-known protocols typically provide increased rewards in an effort to draw liquidity.
Lately, the crypto lending subject has expanded into realms which might be sometimes dominated by conventional finance. That is very true for actual property, the place various experimental cryptocurrency-based mortgage and itemizing platforms are making headway.
Platforms like Vesta Fairness and the newly launched USDC.properties provide 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 approach to put the hodl bag to make use of is by farming stablecoins. The cryptocurrency market is well-known for its excessive volatility and high-risk trades, however incomes a yield on stablecoins is a safer approach to develop a portfolio with out the draw back danger of investing in Bitcoin (BTC) and altcoins.
In bull and bear markets, liquidity is required for DeFi protocols to perform correctly, and the combination 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 provide yield on stablecoin liquidity swimming pools, and charges can attain as excessive as 20% APY.
Associated: Bipartisan invoice to present CFTC authority over exchanges and stablecoins
No-loss token choices
One other approach 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 happen on the Polkadot and Kusama networks. In the sort of protocol launch, buyers thinking about supporting a mission can lock up DOT or KSM for a specified time frame as a type of collateral backing for the mission.
Contributors obtain the native token of the newly launched protocol In change for locking their funding within the mission’s sensible contract. After the designated lock-up interval is full, the entire stability 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 the sort of no-loss token providing. One was lately employed throughout the launches of Astroport and Mars Protocol.
Lockdrops have additionally been known as airdrops as a result of they technically don’t assist tasks elevate funds, reasonably they require some stage 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 mission throughout its preliminary launch.
The Astroport launch concerned a novel liquidity bootstrapping part the place contributors might present liquidity pool pairs in change for the next reward stage. Upon lockup, a one-time lockdrop reward is distributed to contributors to carry, commerce or use to offer liquidity.
Liquidity suppliers additionally obtain buying and selling charges and different incentives relying on the liquidity pool they’re in as a manner 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 wish to accumulate as a reward.
Need extra details about buying and selling and investing in crypto markets?
- Vesta Fairness and Algorand breathe new life into actual property tokenization
- Trying to take out a crypto mortgage? Right here’s what it is advisable know
- Web3 options goal to make America’s actual property market extra accessible
- Decentralized finance: The very best methods to take part and function
- Decentralization ‘completely important’ in constructing crypto capital markets
The views and opinions expressed listed below are solely these of the creator and don’t essentially mirror the views of Cointelegraph.com. Each funding and buying and selling transfer includes danger, you must conduct your individual analysis when making a call.