For years, cryptocurrency advocates have touted the world-changing functionality of digital foreign money and blockchain know-how. 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, just a few obtain this, and the others are mere speculative investments.
Right here’s a have a look at the three issues cryptocurrency buyers can truly “do” with their cash.
Maybe the best use case provided to cryptocurrency holders can be one of many oldest financial functions in finance: lending.
Ever because the decentralized finance (DeFi) sector took off in 2020, the alternatives obtainable for crypto holders to lend out their tokens in trade for rewards have multiplied.
Blue-chip DeFi protocols like Aave, Maker and Compound supply cheap yield on stablecoins, and lesser-known protocols typically supply greater rewards in an effort to draw liquidity.
Just lately, the crypto lending area has expanded into realms which can 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.properties supply crypto holders the chance to collateralize their belongings to acquire a mortgage or lend them out to aspiring dwelling patrons in trade for long-term yield.
One other approach 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 approach 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 perform correctly, and the mixing 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 supply 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 approach 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 sort of protocol launch, buyers considering supporting a mission can lock up DOT or KSM for a specified time period as a type of collateral backing for the mission.
Contributors obtain the native token of the newly launched protocol In trade for locking their funding within the mission’s good contract. After the designated lock-up interval is full, the overall stability of tokens is returned to the contributor, which means they preserve their authentic holdings whereas additionally including new belongings to their portfolio.
Lockdrops are one other instance of this sort of no-loss token providing. One was not too long ago employed throughout the launches of Astroport and Mars Protocol.
Lockdrops have additionally been known as airdrops as a result of they technically don’t assist initiatives elevate funds, moderately they require some degree 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 part the place contributors might present liquidity pool pairs in trade for the next reward degree. Upon lockup, a one-time lockdrop reward is distributed to members to carry, commerce or use to supply liquidity.
Liquidity suppliers additionally obtain buying and selling charges and different incentives relying on the liquidity pool they’re in as a manner 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 trade for yield and a alternative of what token they wish to accumulate as a reward.
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