Making money while you are asleep is the new motto for investors and entrepreneurs. If you are a crypto enthusiast, you are lucky because these new digital currencies have various ways to generate passive income.
Cryptocurrencies introduced several utilities and ways to make money, including trading, play-to-earn gaming concepts and digital investments. Similar to conventional investment, there are lucrative ways to make your money work for you in Web 3.0, which we will discuss in detail.
Generating Passive Income in Decentralised Economies
Trading Bitcoin and other cryptos is the most common way to make gains, where you buy a cryptocurrency at a cheaper price and sell it for more. However, passive income means making money without direct interaction with the market or its participants.
Since decentralised platforms are relatively new and lack centralised authority, they rely on Web3 and crypto communities to maintain and develop the network and make it more reliable in terms of security, transparency and efficiency.
Investing in cryptocurrency’s long-term securities aims to put funds and coins for the sake of developing networks, rewarding miners and validator nodes and maintaining blockchain security.
3 Ways To Invest In Decentralised Finance
The Blockchain and decentralised economies rely on crypto enthusiasts to maintain and develop the network, and crypto investors rely on communities to increase their investments to make returns bigger and more lucrative.
Crypto staking is similar to conventional investment with fiat money at central or commercial banks, which entails putting digital coins and tokens in various staking projects for a period of time.
The investment period – aka lock-up period – is determined by the project initiator and can range from 3 to 12 months. Crypto staking pools are the collections of investors’ crypto money aimed to participate in the transaction validating process used in the proof-of-stake protocol and reward miners in the proof-of-work mechanism.
This investment opportunity looks similar to the aforementioned crypto staking. However, the focus is slightly different in liquidity mining. Investors put their decentralised coins and tokens in liquidity pools aimed at increasing the liquidity of decentralised exchange and swap platforms and, eventually, participating in the overall DeFi well-being.
Lending in decentralised finance is similar to traditional borrowing in centralised banking systems, but it aims to increase the liquidity of DEXes and crypto projects through private lending campaigns.
Lending in decentralised finance is managed by smart contracts, which eliminates the bureaucratic procedure of analysing the risks and evaluating payability and credit score. Smart contracts regulate the lending process by matching investors with pools, ensuring their wallets can afford the requested amount to initiate the transaction.
The decentralised is full of opportunities to invest and make money, including generating passive income through various liquidity and lending strategies.
Crypto staking is a famous Web 3 investment that entails locking up crypto tokens and coins in staking pools to develop the blockchain. Moreover, DeFi lending and liquidity mining increase liquidity at exchanges and platforms.