By: Ofir Beigel | Last updated: 9/14/21
If you’re holding crypto as a long-term investment, you may have thought about using it to generate a return. In this post, I’ll explain how you can earn interest on your crypto and how each method works.
How to Earn Interest on Crypto Summary
There are several ways you can make money with crypto. For those already holding crypto for the long-term, you may want to consider earning a return on those holdings via staking, crypto interest accounts, DeFi and yield farming. Finally, it’s important to research each method properly before putting any of your crypto to work.
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That’s how to earn interest on crypto in a nutshell. For a full explanation on each of these methods, keep on reading. Here’s what I’ll cover:
- Staking Cryptocurrencies
- Crypto Savings Account
- DeFi and Yield Farming
- Getting Started with Earning Interest
- Important things to consider before investing
- Conclusion
1. Staking Cryptocurrencies
In return for helping to maintain the network, a staking reward will be distributed between the stakers in the form of interest. The annual interest rate, also known as APR or APY, varies a lot between coins and can range anywhere from 0.05% to 100% per year.
A higher interest rate often means there are additional risks, so you’ll want to do some research before deciding which coin you’ll want to stake.
Another important aspect of staking is that each coin has different rules. For example, if you stake Ethereum, you’ll need to lock up your funds for a very long period of time. At the time of this article, it currently doesn’t even have a clear end date. Other coins may allow for a much shorter and well-defined staking period.
While staking can be done directly from your computer without the need for any dedicated equipment, this process is fairly technical, has a lot of limitations and isn’t advised for beginners. The easiest way to stake for a beginner would be through an exchange or a wallet.
Most popular exchanges like Kraken, Bitstamp and Binance allow you to stake a variety of coins. Aside from the ease of use of staking on an exchange, the minimum amount to stake will usually be fairly low and in some cases there won’t even be a minimum lock up period.
On the downside, when you’re staking on an exchange you’re giving up control of your funds to the exchange. This means that your funds are at risk if the exchange gets hacked or goes out of business. Additionally, most exchanges take a fee for providing their staking services.
A good alternative for people who don’t want to give control over their funds would be to stake…
Read more:3 Ways To Earn Interest On Your Crypto (2021 Updated)
