Cryptocurrencies have been the talk to town because of their huge profit potential. The crypto market offers many investment opportunities. After hearing the success stories of people earning millions of dollars from crypto, most people come into this industry. Everyone in this industry has a common purpose of making money but not all end up doing this. The reasons include they do not have enough information on how this industry works. Today, we will discuss, can digital currencies increase your profits without active involvement? Also, if it is, then how can you make money without actively doing anything.
So, keep reading!
Increase your profits in cryptocurrency with no active involvement
There are many ways through which you can make money if you own cryptocurrencies. The cryptocurrency industry is highly volatile, and prices change every second. It is because the market is open 24 /7. Therefore, if you want to make money in this industry, you must be aware of every market change. Undoubtedly, it appears challenging. There are various types of cryptocurrencies to choose for increasing your profits. You can choose DEFI, P2P or crypto lending for having passive income. Lending cryptocurrency has some options in this sector and allows you to increase your profits without active involvement.
What is crypto lending?
Crypto lending is a process that allows investors to lend their digital assets to different borrowers. In exchange, they earn crypto dividends, explicitly saying interest payments. Lending enables investors to increase the value of their assets while holding them.
Crypto lending is an effective way to earn passive income with no actual involvement.
How does crypto lending work?
Crypto lending does not demand continuously worrying about market changes like in trading. The crypto lending platform plays a vital role in making the entire lending process automated. Investors\lenders do not have to bother what is happening behind the lending process.
Crypto lending involves the following steps.
- An investor goes to a lending platform to offer his cryptos for lending purposes. He deposits his assets in a wallet on the platform to make them available for lending out.
- A borrower requests the lending platform for a loan. He offers collateral to get the loan.
- Crypto lending platform analyzes the request of the borrower. Once the loan is approved, the platform transfers the funds to the borrower’s account, replacing the collateral.
- The investor starts receiving interest payments weekly or monthly, as decided, directly to their accounts.
The borrower cannot use his cryptos until he pays off the entire loan amount and the interest payments. The value of the collateral is always more than the loan. In case if the borrower fails to pay the loan back, investors can sell this collateral to recover his losses.
In the entire process, investors are not doing anything. They just deposit their digital assets on the platform and start receiving profits.
How much profit can one make from crypto lending?
Profit from crypto lending depends on the interest payment the investor is receiving.
Crypto lending platforms allow investors to lend digital currencies, including crypto coins and stable coins such as Binance USD, USD Coin, etc. The interest rate for cryptos is 3% to 7% and can be a lot higher for stable coins- up to 17%.
The more rewarding coin is, the higher will be the profits.
How to invest in crypto lending?
Investing in crypto lending is very simple.
The first step is to choose a lending platform. It is crucial to select the right lending platform. It is because the lending platform takes care of all transactions during the entire process. Therefore, it must be reputable and trustworthy.
The next step is to check all parameters such as the interest rate, supported currencies for lending, history, backup system, user feedback, etc. Compare different platforms and choose the one the best meets your demands.
The popular crypto lending platforms are Compound, MakerDAO, Aave, BlockFi, Celsius Network, Nexo, etc.
Crypto lending has gained momentum, with a large number of people adopting it. It is clearly because of high rewards with no active involvement. It is the best option to make money with digital cash for those who do not have much time. However, it is still a new segment in the crypto industry and is continuously evolving.