Earning from the Crypto market is now one of the trending ways for users. A major portion of the users gets to profit from the cryptocurrency market through trading. Trading is the most known technique to earn profit. Though, the quantity is very less.
Trading is a risky way to earn profit from cryptocurrency. Users might lose their capital due to scams or market crashes. As there are several scams and fraud taking place, losing money became one of the fears for investors.
But apart from trading, there are more ways to earn profit through cryptocurrency. You are going to know about the ways through which you can get profit without risky trading.
Another two interesting ways of earning through cryptocurrency investment are Staking and Yield Farming. These two ways are a kind of passive way. In both, users have to lock or hold their tokens for a particular period. After, they get interests and free tokens instead of the holdings.
In comparison with trading, these ways are much more acceptable as they are not risky. Both methods have zero risk to earning or investing. In this article, you will get a rough theoretical idea about Staking and Yield farming.
Yield Farming in Cryptocurrencies :
Yield Farming is the process of increasing your tokens through lending. You have to lend your tokens to those who need them or who are searching for them. After lending, you will get a specific amount of interest as a profit.
Yield farming pushes the users to create or develop the liquidity pool on a Defi (decentralized finance) platform through lending their coins. It later helps the users who need the tokens.
That liquidity pool development platforms pay interest to the lenders in the exchange for their lending. The interest can be in the form of tokens or special tokens. The special tokens are known as LP tokens.
For instance, Pure Oxygen coin is one of the lending platforms. You can lend your Pure Oxygen coins to develop the liquidity pool. In exchange, you will be paid its interest. Apart from lending, you can stake your coins to earn more profit on that platform.
Staking In Crypto :
Staking is a process that validates the transactions on a blockchain using the Proof of Stake (PoS) mechanism. PoS is different from the Proof of Work mechanism. PoS allows its user community to stake its tokens to set up nodes and validate transactions. PoS is one of the efficient mechanisms in the blockchain in terms of energy consumption and set-up cost.
In this method, you don’t need to invest in a costly hardware setup like mining. A user has to only stake or lock their tokens in the contract. That staking allows the user to act as a validator to validate the upcoming transactions in the network. Then they can earn the verification fee as their profit.
Yield Farming Vs Staking :
Yield farming allows the users to increase both, the number and value of their crypto. A user can earn interest from crypto. That will get the users more tokens. Additionally, the user’s contribution to the liquidity pool helps many others to trade the token.
On the other hand, Staking also allows you to earn money from your crypto. You can easily get profit through an annual interest in the range of 7% to 12%. Though, staking depends on which tokens you hold.
Another advantage of staking is that it allows you to contribute to safeguarding the environment by not involving in the mining of cryptocurrencies. Mining is a more energy-intensive and costly process to generate new cryptocurrencies.