Likewise, they can vary considerably in the fees they charge - ranging from very reasonable to almost ludicrous. That said, these funds generally have a few barriers to entry, which can include a large minimum investment amount (e.g. Other funds, like Pantera Capital, offer more complex investment products, such as the Pantera Blockchain Fund - which provides exposure to a wide range of crypto markets, including venture equity, liquid tokens, and more. These allow fiat investors to gain exposure to the price action of a single cryptocurrency. These can be relatively simple funds, like Grayscale’s single-asset investment products - such as its Bitcoin trust or Decentraland trust. Much like traditional hedge funds can be used to put your fiat capital to work, crypto funds allow you to generate revenue using your digital assets (and oftentimes fiat currency too). Join a Crypto Fund?Īs you’ve probably noticed by now, most passive income streams will require some initial labor and periodic maintenance, whether that be depositing your assets to a liquidity pool, operating a validator node, or participating in a guild.Ĭrypto funds are an exception since they are truly passive. Be sure to do your due diligence before handing over your funds or assets to any guild. What to watch out for? Not all blockchain gaming guilds are created equal. Some of the most popular currently include Uniswap (for Ethereum), PancakeSwap (for Binance Smart Chain), Pangolin (for Avalanche), WagyuSwap (for Velas), and SushiSwap (multi-chain). This is split between all liquidity providers, including you.Ī huge number of AMMs now exist and most major smart contract platforms now have one or more suitable options. When a trader sources liquidity from the pool, they pay a trading fee - usually around 0.2-0.3% of the trade size. This liquidity is then used to serve traders executing swaps using this pool.īut here’s where it gets interesting. Liquidity is generally contributed by the community, who always maintain their proportionate share of the pool regardless of how much liquidity is added. These platforms offer decentralized liquidity pools that allow users to trade while simultaneously facilitating efficient price discovery by simply using the weighting of the two or more assets held in a pool to determine each of their values, such that a pool containing 100 ETH and 400,000 USDC would price each ETH at $4,000 and each USDC at 0.00025 ETH. Likewise, many exchanges, including both Binance and Huobi allow users to earn a yield on their cryptocurrency deposits.īut a specific type of DEX, known as an automated market maker, also unlocked an entirely new way for cryptocurrency holders to generate a yield on their assets - by becoming liquidity providers. Some of these are centralized cryptocurrency savings accounts, like those offered by Nexo, BlockFi, and - these generally use your funds to provide overcollateralized loans to institutional borrowers. Much like regular currencies can earn interest while being held in a savings account, cryptocurrencies can also be deposited to various platforms to earn a yield. Here, we take a look at seven ways you can put your cryptocurrencies to work, helping you generate a potentially attractive passive income with little to no input or management required. But what if you’d just like to earn passive income without all the typical headache that comes with staying on top of the market 24/7? Fortunately, there are now dozens of ways to do just that, by leveraging your cryptocurrencies to generate returns in the background, freeing up your time for more important matters - like reading our 2021 Bitcoin wrap-up.
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