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The cryptomarkets are volatile beasts at the best of times. In recent months they have been in volatility overdrive, with one bloodbath following another as basically every token with any utility crashed and burned. Those who bought in at the height of crypto’s astonishing bull run in 2021 - and there were many - have been absolutely REKT by the disaster that followed. While Bitcoin is currently down about 70% from its November all-time high of $69,044, altcoins have fared even worse, with the likes of SOL down 85% and AVAX crashing by an incredible 93% in the last few months.
Some have tried to trade their way out of trouble, but even the best traders can get REKT. Smarter traders operate on the idea that every good trade helps them to survive a couple of bad ones, but when the market is in freefall it becomes tough no matter what you do. Add to that, trading is a labor-intensive occupation that’s far too absorbing to be just a side hustle. Once you get started, it becomes incredibly consuming, with every waking moment spent watching the charts, news and trends in an attempt to second-guess what will happen next.
So what to do in a bear market as depressing as this one? Try as we might, it’s almost impossible to do nothing at all, and all the more so when your portfolio’s value evaporates to nothing before your eyes.
Luckily for crypto fans this is a unique space that always presents opportunities to eke out a profit, no matter what the market conditions are. Even better yet, there are ways to do so that don’t involve spending countless sleepless nights watching the market crumble away to hell. Here are five of the laziest yet most profitable ways to make it big in crypto.
First up is taking, which is something that can only be done on a proof-of-stake blockchain. PoS, as it’s known, provides a way for network users to participate in the validation of new transactions to the blockchain and earn rewards for doing so.
Staking is perhaps the simplest way to earn money from crypto because unlike miners on proof-of-work blockchains, there’s no need to invest in tons of expensive hardware. All that’s needed is to deposit tokens on a platform that supports staking. The rewards will be determined by the amount of coins staked, though bear in mind that they are paid out in the same native token, whose value constantly fluctuates. So, if the price of the token drops, so does the value of the rewards.
Some of the best blockchains for direct staking include Coinbase, Crypto.com, Binance, eToro, Kraken and Gemini.
The way staking works is that, the more tokens staked the higher the rewards will be. The exact mechanism for choosing a validator varies from network to network, but in most cases it's a randomized process that gives greater weight to those who stake more tokens. The average rewards vary from token to token, but as an indication most platforms that support Ethereum staking will pay out an APY of 6%. From the lazy investor’s point of view, the most important thing to remember is that the more coins you stake, the higher your rewards can be.
Also known as yield farming, this involves depositing coins into liquidity pools on decentralized exchanges.
DEXs, as they’re known, incentivize users to deposit tokens into their liquidity pools so that traders have the liquidity required to make seamless, instantaneous swaps on their platforms. This is unlike centralized exchanges, which rely on order books to pair the various buy and sell orders they receive. LPs can then receive a portion of the transaction fees generated by each pool as a reward for locking up their assets and providing this liquidity.
Liquidity pools are created using smart contracts that self-execute and often require that users agree to lock their tokens in the pool for a specified amount of time. This can be risky because you never know what will happen to that token’s price during that time, but the rewards are among the highest of all in terms of passive income, with some platforms offering an APY of 30% on the best known tokens.
Providing liquidity isn’t without risk though. Because most liquidity pools are dual-asset pools, participants are usually required to deposit both tokens in a pair. This puts them at risk of impermanent loss, which is a unique risk that refers to the value fluctuations of those two assets. Impermanent loss occurs when funds are deposited into an Automated Market Maker and then withdrawn at some later date. In some cases, the price movements might mean the LP has lost more money than they’d have made simply from hodling those tokens.
Luckily, there are a number of DeFi protocols trying to address this risk. Balancer has created a unique approach to liquidity that makes it possible to provide liquidity to Ethereum trading pairs without exposure to the price of ETH. So they can earn passive income on the trading fees of assets such as MKR or ZRX, without any risk of impermanent loss. Users simply earn rewards from the trading fees involved in those asset swaps. Further, it provides higher returns on low demand assets by leveraging arbitrage opportunities and the desire to mitigate slippage.
Another opportunity to make money in crypto is with lending, the concept of which is fairly self explanatory. Lenders can earn a profit by putting their funds into a pool that other users can borrow against.
There are multiple platforms that facilitate crypto lending, with some of the most popular ones being Aave, Compound and Nexo. What’s great about this model is that borrowers are still vetted by third parties and they are often required to deposit some kind of collateral, usually another kind of crypto token. What’s more, by depositing tokens into a pool with other user’s funds, the risk of a borrower defaulting on a loan is spread across multiple users.
In the case of Nexo, the exact level of interest paid out depends on the token. It supports 32 tokens at present, with the highest interest generally being paid to those who loan stablecoins, as they are often the most in-demand. What’s good about Nexo is the options users have - they can either earn interest paid out in the same token they deposited, earning ETH on the ETH they deposit, for example, or earning interest in the platform’s NEXO token, which provides an additional 2% as an incentive.
Another factor that affects the APY Nexo users can earn is their loyalty level. This is determined based on the percentage of NEXO tokens within a user’s portfolio, rather than the total amount they have deposited. So rich whales don’t get preferential treatment on Nexo. The higher the percentage of NEXO tokens someone has, the greater their loyalty level is, leading to higher interest payouts.
Like everything else in crypto, there are risks associated with lending. In addition to borrowers defaulting, it’s also possible that the DeFI platform itself might have problems, as highlighted recently by Celsius when it announced it was temporarily pausing all “withdrawals, swaps and transfers between accounts” due to what it said was “extreme market conditions”.
The announcement immediately sparked fears that Celsius likely doesn’t have the assets to back up its deposits in the event of a rush by investors to withdraw their funds.
Copy trading is designed for people who’d still like to trade without putting any effort in whatsoever. It’s a perfect lazy way to earn a passive income that involves just replicating the trades of more experienced investors in order to enjoy the same high returns as they do on a daily, weekly and monthly basis.
What’s great about copy trading is it doesn’t require big funds either, with many platforms starting at as low as $1 per trade, making it a very accessible way to grow your portfolio.
One of the most popular such platforms is BingX, which allows users to follow multiple professional traders simultaneously. For copy traders, the only work they need to do is identify which traders to follow. Luckly, BingX provides lots of useful data on the best trader’s trading history, their risk-reward ratio, return-on-investment indicators and other parameters.
More recently, BingX has launched a unique take on copy trading, called “Grid Trading” in order to give its users more flexibility. Grid trading is a strategy that, in simple terms, involves hedging, or placing simultaneous buy and sell orders at certain levels. The aim of this approach is to maximize the profits while the in-built hedging system ensures that the risks are minimized. What BingX has done is apply the benefits of this strategy to copy trading to help ensure traders can consistently take profits from the volatility of crypto assets.
With grid trading, users can set gradual buy and sell orders within a defined range of prices. So long as the price oscillates between these ranges, users can earn a reliable profit from the price swings.
Become A Validator
The final option for lazy crypto profiteering is to become a network validator, which is really just a more sophisticated way of staking.
Becoming a validator means taking on the responsibility of serving as an independent node on a PoS blockchain. Unlike regular staking, it requires users to stake a pretty substantial, minimum number of coins, though the exact amount will depend on the blockchain. In the case of Ethereum, one of the best known and most popular blockchains for validators, that minimum is set at 32 ETH (around $36,000 at the time of writing). You’ll also need an additional 1 ETH to pay for the gas fees.
Luckily, there are plenty of blockchains with a much lower minimum staking requirement, such as Cardano, Tezos and Cosmos, to name just three.
A second requirement is that you’ll require a fair amount of storage space on whatever computer you use to do the validation - with Ethereum, that’s 250GB, plus an additional 8GB of RAM. And while you don’t need to be an expert, you also need to read up on the technical specifics of how to get the node software up and running.
The rewards for validating will depend on the amount of tokens you’re staking on the network. So this becomes a key decision, because most networks require that these funds are locked up for a specific period of time. The more coins you stake, the higher the potential rewards, but bear in mind you won’t be able to withdraw them and sell them, no matter what happens to the price of those tokens.
Staking rewards are calculated as a percentage of the staked funds, and vary depending on the price of that asset.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other adviceInvestment Disclaimer