Earn Passive Income in Cryptocurrency – part 8
This part of the cryptocurrency passive income guide will talk about earning passive income by using lending platforms.
Lending platforms
There has been a big expansion in the industry of lending platforms that allow you to leverage your cryptocurrencies and make a passive income.
There are two types of lending platforms, custodial and decentralized ones.
Custodial services are the beginner-friendly way of doing the lending, as they take your money and lend it out to borrowers. They automatically pay you the interest, but you lose control of your assets.
The other side of the coin is the fully decentralized services, where you never give away the custody of your funds. Your funds are stored in smart contracts and accessible at any time. Borrowers can get your loan only when they put up to 150% of the borrowed amount as collateral. This incentivizes them to pay you back, while the interest rate incentivizes you to loan them the crypto in the first place.
Both of the lending platform types offer attractive interest rates for the lenders.
There is another (additional) way of earning interest by lending your cryptocurrencies, which is custodial by nature but safer than most custodial platforms, and that would be lending your money via cryptocurrency exchanges. Most cryptocurrency exchanges offer some form of a service where users themselves can lend the cryptocurrencies to other users for the purposes of increasing trading leverage.
Projects you can check out
The most popular custodian lending platforms include BlockFi, Celsius, Nexo, Cred, Crypto.com, and more.
When it comes to exchange platforms, you can check out Bitrue, Bitfinex, Poloniex, Binance Lending, and Coinbase.
Non-custodial decentralized lending platforms include names such as Nuo, Dharma, Lendf.me, Compound, dYdX, and fulcrum.
Check out our cryptocurrency lending videos to learn more about various lending platforms, as well as their pros and cons.
Conclusion
Many crypto enthusiasts use the HODL method and keep their cryptocurrencies in their wallets for long periods of time, without their funds ever moving. By utilizing their funds in some way, they can create a passive income stream for themselves. Lending is certainly one great option, but you have to do your research and pick the right exchange and the right type of platform for you.