For years, cryptocurrency advocates have touted the world-changing functionality of digital foreign money and blockchain expertise. But with the passing of every market cycle, new initiatives come and go, and the promised utility of those “real-world use case” initiatives fails to fulfill.
Whereas a majority of tokens promise to resolve real-world issues, only some obtain this, and the others are mere speculative investments.
Right here’s a take a look at the three issues cryptocurrency buyers can really “do” with their cash.
Maybe the only use case supplied to cryptocurrency holders can also be one of many oldest financial purposes in finance: lending.
Ever for the reason that decentralized finance (DeFi) sector took off in 2020, the alternatives accessible for crypto holders to lend out their tokens in alternate for rewards have multiplied.
Blue-chip DeFi protocols like Aave, Maker and Compound provide affordable yield on stablecoins, and lesser-known protocols typically provide increased rewards in an effort to draw liquidity.
Just lately, the crypto lending subject has expanded into realms which might be usually dominated by conventional finance. That is very true for actual property, the place plenty of experimental cryptocurrency-based mortgage and itemizing platforms are making headway.
Platforms like Vesta Fairness and the newly launched USDC.houses provide crypto holders the chance to collateralize their belongings to acquire a mortgage or lend them out to aspiring house patrons in alternate for long-term yield.
One other option to put the hodl bag to make use of is by farming stablecoins. The cryptocurrency market is well-known for its excessive volatility and high-risk trades, however incomes a yield on stablecoins is a safer option to develop a portfolio with out the draw back threat of investing in Bitcoin (BTC) and altcoins.
In bull and bear markets, liquidity is required for DeFi protocols to operate correctly, and the combination of stablecoins on centralized and decentralized exchanges has helped the market mature and keep sufficiently liquid.
Platforms like Curve Finance, Beefy Finance and Dealer Joe provide yield on stablecoin liquidity swimming pools, and charges can attain as excessive as 20% APY.
Associated: Bipartisan invoice to offer CFTC authority over exchanges and stablecoins
No-loss token choices
One other option to “use” cryptocurrency is by collaborating within the no-loss token choices launching throughout the ecosystem.
An instance of a no-loss token providing is the parachain auctions that happen on the Polkadot and Kusama networks. In this kind of protocol launch, buyers fascinated about supporting a mission can lock up DOT or KSM for a specified time frame as a type of collateral backing for the mission.
Contributors obtain the native token of the newly launched protocol In alternate for locking their funding within the mission’s sensible contract. After the designated lock-up interval is full, the entire steadiness of tokens is returned to the contributor, that means they maintain their authentic holdings whereas additionally including new belongings to their portfolio.
Lockdrops are one other instance of this kind of no-loss token providing. One was just lately employed in the course of the launches of Astroport and Mars Protocol.
Lockdrops have additionally been known as airdrops as a result of they technically don’t assist initiatives increase funds, relatively they require some stage of dedication for future use from token recipients. Whereas airdrops simply distribute tokens to customers who opt-in, lockdrops require events to decide to locking up some liquidity that may be utilized by the mission throughout its preliminary launch.
The Astroport launch concerned a novel liquidity bootstrapping section the place contributors might present liquidity pool pairs in alternate for a better reward stage. Upon lockup, a one-time lockdrop reward is distributed to contributors to carry, commerce or use to offer liquidity.
Liquidity suppliers additionally obtain buying and selling charges and different incentives relying on the liquidity pool they’re in as a approach to enhance the chance price of offering that liquidity.
As soon as the agreed-upon lockup interval is full, customers are free to take away the liquidity.
No loss token choices give long-term crypto holders an opportunity to earn tokens for newly launched protocols in alternate for yield and a alternative of what token they want to accumulate as a reward.
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