In the last several years, the popularity of buying and trading cryptocurrency has grown tremendously and unlocked new economic potential for investors. Understanding your options for long-term investment can help you grow your investment and diversify your portfolio. Here are three key ways investors are generating gains on crypto investments by fx liquidity.
Join a Stake Pool
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Staking your crypto investment with a stake pool is a great way to earn rewards long-term. Some stake pools can earn more than 10% or 20% per year, creating a highly lucrative rewards system for investors. To take advantage of this option, you need to invest in a crypto that uses a proof-of-stake model. Cryptos that use these models allow their owners to create nodes that validate transactions within the blockchain. Each node is run through a coin owner who stakes theirs and others’ investments as collateral for a chance to validate transactions. If your node is randomly selected to validate a block and the owner completes the validation in time, your node is rewarded with returns. This model reduces the likelihood of attacks on the network and reduces the amount of computational work needed to maintain verifications on a blockchain network.
Liquidity Farming
Liquidity farming or yield farming is another excellent option for generating rewards on your crypto investment. FTX offers many resources for investors wondering ‘what is yield farming.’ FTX explains, “yield farming enables yield farmers to lend out their crypto coins to borrowers in exchange for interest or fees- or better yet, more crypto coins.” Like lending from a traditional bank, there is always risk involved for borrowers and lenders. To get started in yield farming, you can join a decentralized app (dApp) platform for farming. The liquidity pools live in these dApps and require fees for borrowers that are then shared amongst investors, as are any interest accrued or coins earned themselves. The dApp you select will have its own rules on the distribution of rewards, so be sure to research the various options before committing to a specific yield farm option.
NFT Investments
Non-fungible tokens, NFTs, are unique digital assets encrypted on blockchain networks that can be exchanged for cryptocurrency. NFTs encode the original data of any digital media, verifying its provenance and establishing inherent value to the asset. By minting digital artworks into NFTs, digital artists can verify the originality of their digital intellectual property and sell them through an NFT marketplace such as FTX. As a crypto investor, you can purchase NFTs to diversify your investment portfolio, similarly to investing in a painting in the art market. NFTs are becoming more and more popular as celebrities begin to purchase ultra-rare NFTs at extreme prices and invest more and more into this digital media marketplace. Be sure to select an NFT marketplace that accepts the crypto of your choice and do your research into the artists and collections that will benefit your portfolio the most. NFTs, like real-life art investments, can protect your portfolio from inflation and will likely accrue value over time. Today, the NFT marketplace holds digital art, music, videos, gifs, videogame collectibles, and many other digital assets that are driving the value of the market up and up.
Investing in your crypto for long-term rewards is a great way to diversify your investments and generate potentially lucrative gains. Do your research to prepare for risks and fluctuations in the market, and be sure that any crypto you hold long-term is invested in the most beneficial way for your financial goals.
