As the cryptocurrency industry becomes increasingly developed, both the number and variety of investment products available also grow in tow — giving investors more ways to generate a return on their crypto-asset portfolio.
Now, it appears blockchain companies are looking to disrupt the traditional loan and investment product space by giving cryptocurrency holders a way to earn a substantial return with little to no risk.
When most people think cryptocurrencies, the idea of huge returns would likely be one of the first thoughts to spring to mind. However, although it is true that simply holding many cryptocurrencies has historically generated significant returns, this is far from the most profitable way to generate a return in 2020.
For example, many cryptocurrency investors turn to online trading to multiply their stash — trading on a variety of spot exchanges, like Coinbase or XCOEX, or modern cryptocurrency derivatives exchanges like StormGain or Deribit.
However, this practice requires market knowledge, skill, and time to successfully turn a profit, which can make it unsuitable for inexperienced investors or anybody that simply lacks the time to dedicate to trading markets.
Fortunately, a variety of platforms recognized an unmet need in the market and began offering a variety of low-risk cryptocurrency investment products. Although these don’t quite match the incredible gains that are possible with cryptocurrency trading, they do allow customers to generate a healthy profit with almost no risk and no need to liquidate their crypto assets.
The way these services generate revenue differs from platform to platform but typically involves either using customer deposits to fund collateralized peer-to-peer loans or using these funds for margin lending — whereby margin traders temporarily borrow funds to open leveraged positions on exchanges — a process that is surprisingly safe thanks to the automatic liquidation policy held by most cryptocurrency margin exchanges.
Although the peer-to-peer lending space and decentralized investment products are still relatively new investment models, there is already a huge amount of choice available, since things have moved quickly in the blockchain and decentralized finance (DeFi) industries.
Fortunately, a number of platforms that make it easier to find and select a suitable investment option have also sprung up in this time. Among these, CoinMarketCap stands out as one of the most reliable, since it simply ranks different cryptocurrency investment options based on the annualized interest rate.
As it stands, StormGain, a popular cryptocurrency futures exchange currently leads the pack with an offer of 10 percent APR on Bitcoin (BTC), Ethereum (ETH) and XRP deposits — almost doubling the rate offered by its nearest rivals in Bitrue and BlockFi. Likewise, StormGain also offers 10 percent APR on Bitcoin Cash (BCH), Litecoin (LTC) and Tether (USDT).
For those looking to invest less prominent digital assets, such as EOS, Stellar (XLM) and Chainlink (LINK), Crypto.com appears to be the best bet, as the platform offers between 2-3 percent APR for these assets, depending on the investment term (60 or 90 days). Like Stormgain, Crypto.com also offers exchange functionality — though this only offers basic spot trading features.
StormGain, Crypto.com, and most other interest-yielding platforms feature a number of safeguards in place to prevent any loss of funds. Overall, this makes investing in these platforms far lower risk than trading, giving investors a way to grow their cryptocurrency balance, while still benefitting from any appreciation in their original portfolio value.