Most people only know about one way of investing in cryptocurrencies, which is trading, i.e. buying and selling cryptocurrencies for a profit. However, the chance of making good profits by trading cryptocurrencies is very little.
Moreover, this type of investment is full of risks and one might lose all their hard-earned money in crypto. What if I tell you that there is a better, less risky and more profitable way to invest in cryptocurrencies? In fact, there are two ways.
Staking and yield farming are two passive methods of investing in and earning from cryptocurrencies. Both methods involve holding or locking your tokens for a specific period in order to earn from them in the form of interest, free tokens or some other benefit.
The best thing about the above two methods of passive investing in cryptocurrencies is that there is almost zero risk involved. Here’s everything you need to know about crypto staking and yield farming and which one is best for you.
What is Yield Farming in Cryptocurrencies?
Yield Farming is the process of increasing your crypto holdings by lending your tokens to those who need them and earning interest for the same.
The process basically involves users lending their coins to create or grow the liquidity pool on a DeFi (decentralized finance) platform, which is then used to lend crypto to others who wish to trade or use it.
The platforms usually pay interest to lenders who deposit their crypto in the liquidity pool. The interest can be paid in the form of tokens or special tokens called LP tokens.
For example, you can start with the Pure Oxygen coin. The platform allows you to lend your Pure Oxygen coins to earn interest. The same will be used to create a liquidity pool for crypto traders. You can stake your coins as well as participate in yield farming of Pure Oxygen coins for maximum benefits.
What is Staking?
Staking is a method of validating transactions on a blockchain that uses the Proof of Stake (PoS) mechanism. Unlike Proof of Work, the PoS mechanism allows people to stake their tokens to set up nodes and validate transactions. This method is much more efficient in terms of energy consumption and set-up cost.
Staking doesn’t require you to invest in a costly hardware setup like mining. All you need to have is tokens that you can stake (lock in the contract), which allows you to act as a validator to validate the upcoming transactions in the network and earn the verification fee as your reward.
Staking Vs Yield Farming: What to do?
Yield farming allows you to grow both the number and value of your crypto. You earn interest on crypto, which gets you more tokens, plus your contribution to the liquidity pool enables many others to trade the token, thereby increasing its value over time.
Staking also lets you earn money from your crypto. You can easily earn an annual interest in the range of 7% to 12% through staking depending on which tokens you hold.
Another benefit of staking is that it allows you to contribute to saving the environment by not participating in the mining of cryptocurrencies, which is a more energy-intensive and costly process of generating new cryptocurrencies.
Moreover, this type of investment is full of risks and one might lose all their hard-earned money in crypto. What if I tell you that there is a better, less risky and more profitable way to invest in cryptocurrencies? In fact, there are two ways.
Staking and yield farming are two passive methods of investing in and earning from cryptocurrencies. Both methods involve holding or locking your tokens for a specific period in order to earn from them in the form of interest, free tokens or some other benefit.
The best thing about the above two methods of passive investing in cryptocurrencies is that there is almost zero risk involved. Here’s everything you need to know about crypto staking and yield farming and which one is best for you.
What is Yield Farming in Cryptocurrencies?
Yield Farming is the process of increasing your crypto holdings by lending your tokens to those who need them and earning interest for the same.
The process basically involves users lending their coins to create or grow the liquidity pool on a DeFi (decentralized finance) platform, which is then used to lend crypto to others who wish to trade or use it.
The platforms usually pay interest to lenders who deposit their crypto in the liquidity pool. The interest can be paid in the form of tokens or special tokens called LP tokens.
For example, you can start with the Pure Oxygen coin. The platform allows you to lend your Pure Oxygen coins to earn interest. The same will be used to create a liquidity pool for crypto traders. You can stake your coins as well as participate in yield farming of Pure Oxygen coins for maximum benefits.
What is Staking?
Staking is a method of validating transactions on a blockchain that uses the Proof of Stake (PoS) mechanism. Unlike Proof of Work, the PoS mechanism allows people to stake their tokens to set up nodes and validate transactions. This method is much more efficient in terms of energy consumption and set-up cost.
Staking doesn’t require you to invest in a costly hardware setup like mining. All you need to have is tokens that you can stake (lock in the contract), which allows you to act as a validator to validate the upcoming transactions in the network and earn the verification fee as your reward.
Staking Vs Yield Farming: What to do?
Yield farming allows you to grow both the number and value of your crypto. You earn interest on crypto, which gets you more tokens, plus your contribution to the liquidity pool enables many others to trade the token, thereby increasing its value over time.
Staking also lets you earn money from your crypto. You can easily earn an annual interest in the range of 7% to 12% through staking depending on which tokens you hold.
Another benefit of staking is that it allows you to contribute to saving the environment by not participating in the mining of cryptocurrencies, which is a more energy-intensive and costly process of generating new cryptocurrencies.
