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How to Earn Interest on Crypto Summary

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.

1. Staking Cryptocurrencies Put simply, staking is the action of locking up or “parking”, a portion of your funds in order to help maintain a specific network.
These networks are generally Proof-of-Stake (PoS) blockchains such as Ethereum 2.0, Cardano, Polkadot.
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.
From 3 Ways To Earn Interest On Your Crypto (2022 Updated)
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 through a wallet. There are a number of staking wallets; Ledger, Exodus and Atomic just to name a few.
Make sure you take a look at what fees each wallet charges: you may find some that don’t charge any staking fees at all. Keep in mind that in most cases wallets will offer a smaller variety of coins that they make available for staking.

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