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Earning APYs On Your Cryptocurrency

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Earning APYs

LEARN HOW TO TRADE, BITCOIN, EOS, ETHEREUM, LIGHTBLOCKS MEDIA

APYs are Annual Percentage Yields. They stand to mean the total interest earned on a particular saving/investment over a one year period. Interest is compounded and computed on a regular basis and applied to the amount to ascertain the

Traditional financial institutions allow us to earn interest on our savings and investments. But Decentralized Finance brings all of the features of the traditional financial institutions on-chain. DeFi offers financial services such as lending and borrowing, insurance and offering crypto bonds on the blockchain, in a decentralized way that works efficiently without an intermediary (whether physical or programmed).

In this article, we’ll be explaining the concept of earning APYs through yield farming and savings. DeFi users can choose to provide liquidity to AMMs, or serve as creditors and earn governance tokens in the process, they can also save in crypto and earn interests on their savings.

EARNING APYs THROUGH YIELD FARMING

DeFi projects have developed a concept called Yield Farming. Yield Farming compounds one’s daily interest to pay back at the end of a one year period. Yield farming is the practice of staking or lending one’s crypto assets to provide liquidity to a particular pool in exchange for higher rewards or to earn additional crypto assets.

A farmer is one who engages in yield farming. A good farmer is one who’s actively looking out for projects that yield higher APYs. They move their cryptos around all the time between different lending marketplaces to maximize their returns. To be a farmer, you’ll have to provide liquidity to a DeFi protocol, either by staking or lending, in return for yield. These protocols now borrow out the staked crypto to investors. Ideally, they collect collaterals in crypto assets, you’ll have to give a higher percentage of cryptocurrency as a collateral, for example, paying $100 BTC for $70 HAG.

According to Binance ,  “Yield farming is the wild west of Decentralized Finance (DeFi)”. Coinmarketcap also says that “Yield farming is currently the biggest growth driver of the still-nascent DeFi sector”. Current market cap for yield farming is $6 billion from $500 million in 2020. This means that there is a total locked value of $7 billion in yield farming projects.

COMMON TERMS USED IN YIELD FARMING YOU SHOULD BE FAMILIAR WITH.

To be a successful farmer, you should be familiar with your tools. Same is applicable on-chain. Common terms used in DeFi are:

  • Liquidity Mining

The concept of Liquidity mining differs slightly from Liquidity provision. You are a liquidity provider if you deposit your tokens to earn rewards (usually collected as gas fees and distributed on a percentage basis to Liquidity providers).

In Liquidity Mining on the other hand, you earn both gas fee revenue and the platform’s own token . It creates additional incentives for yield farmers as token rewards can be added to the yield they are already generating. A very common platform for liquidity mining is Compound.

  • Liquidity Pool

This is a term used to represent the total amount of money locked in a particular yield farming smart contract.

  • Liquidity provider (a.k.a. market maker). 

Any organization or person who provides their crypto assets to a platform to help with decentralization of trading and is rewarded with fees generated by trades on that platform in return, is a Liquidity provider. 

  • Automated market maker.

 These are platforms that allow you to trade crypto assets without permission by using liquidity pools instead of the traditional market approach of buyers and sellers. They incentivize liquidity providers by rewarding them with a fraction of the fees paid on transactions executed on the pool.

  • Risks

Like the saying goes, “no risk, no reward”. Yield farming is built on mutual trust amongst parties. Farmers are willing to take high risks to hit double or triple digits APY returns. Cryptocurrencies are volatile and could rise/fall at any given time. In the same way, Farmers APY could increase or decrease. 

lightblocks interest on btc

There could also be bugs in a yield farming smart contract, leaving a window for Hackers to infiltrate the platform and make away with huge amounts of money. Yield farming smart contracts undergo thorough audit to ensure that all bugs are fixed to prevent their platforms being hacked.

EARNING APYs ON SAVINGS

Be it a flexible or fixed period, when you provide your savings to a crypto platform, you earn interests on the amount saved. A notable platform to save your crypto assets is the HaggleX App . With the HaggleX app, you can save BTC, ETH, HAG, XRP, LTC, USDT or TRX. An interesting reason why you should save with the HaggleX app is that you can earn as high as 21% ROI on fixed savings between a range of 3 to 6 or 9 months.

HaggleX goes further to choose one lucky saver to win $100 weekly. This promo is ongoing as at the time of writing and will be active till December. As Bitcoin Archive puts it, ‘Save in Bitcoin, borrow in fiat’. Saving in crypto is most likely the safest way to grow your money and wealth. 

“Bitcoin and Crypto are an asset class that can no longer be ignored.”

CEo, Phillipine’s stock exchange

REASONS WHY YOU SHOULD SAVE IN CRYPTO

  • HIGHER APYS

Cryptocurrency yields higher interests for you than what you’d likely earn from saving at a traditional bank. Notably, on an average, traditional banks pay less than 10% APY on savings. When compared to the APYs earned on Crypto savings, the best option is to save in cryptocurrency.

  • TRANSPARENCY

Due to how the Blockchain is run, transactions are visible to everyone and you can check the growth of your asset at any given time. 

Understand that if you save 1 BTC on the HaggleX app (at an assumed rate of $5000/1 BTC), at the end of your fixed savings period, you get 21% ROI plus the current worth of your BTC (meaning that if the price of BTC has risen in value to $10000, your capital is increased by 100%). The ease of accountability and transparency is part of what makes saving in crypto desirable.

  • EASY ACCESSIBILITY

Unlike traditional banks where one goes through different channels before they can cancel their fixed savings or withdraw, saving in crypto platforms (HaggleX) allows you access to your funds without much hassle.

CONCLUSION

We’ve explored all the beautiful ways to earn money from DeFi savings and investments. Kickstart your new financial plan today by downloading the HaggleX app here and saving in cryptocurrency. And don’t worry about comparing yourself to others who started before you, a large majority of people have no crypto asset at all so you’re in on this early. Leave your comments and questions, I’ll love to hear and answer them.

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