Although many do not know it, the platforms with crypto assets They allow access to a sort of fixed term. What we usually call a fixed term in the context of the traditional financial system, in the cryptocurrency ecosystem is called staking or yield farming (in Spanish, “performance agriculture”). But how to invest and what are the benefits and risks?
The fixed term in cryptocurrencies has similar conditions to a traditional one but offers better profitability. In recent years, Saving in digital currencies has become one of the most chosen options to dollarize investments, especially through stablecoins. This is because one of the fundamental characteristics of cryptocurrencies is to increase in value over time.
Most of the crypto buyers, after acquiring the assets, leave them immobile in their account, simply waiting for their appreciation in the future. However, there is a way to maximize profits in dollars by placing the currencies in a fixed term, generating interests that can be much higher than those of a traditional fixed term. This can be done through different techniques such as staking and yield farming.
What is yield farming
Yield farming is a cryptocurrency investment technique that allows users to earn profit through liquidity provision to certain decentralized finance (DeFi) platforms. Active and consistent participation is often required to maximize yields in yield farming, and yields can be quite variable and subject to fluctuations in the market.
And the staking?
Meanwhile, staking refers to the action of keeping a certain amount of cryptocurrencies in a specific wallet and block them to help keep that cryptocurrency’s network running. Staking participants can earn rewards in the form of more cryptocurrency simply for keeping their coins locked up.
For either of these two strategies, investors deposit their cryptocurrencies on a specific DeFi platform and receive cryptocurrencies or tokens in exchange. These rewards can then be used to earn an interest rate, receive interest for providing liquidity, or even to vote on platform governance decisions. Likewise, they can be sold, like any other cryptocurrency.
Beyond DeFi protocols, there are also centralized platforms that offer this type of investment service. For example, the most recognized exchanges, such as Binance, Coinbase, among others.
How to make the crypto fixed term step by step
Step 1: buy cryptocurrencies
To get started, the first thing to do is open an account at a cryptocurrency exchange and buy one of them, be it Bitcoin, Ether, DAI, etc.
Step 2: Choose the right platform
It is advisable to opt for a platform with a good staking and yield farming system and of course, good interest. It can be the same one in which we buy the cryptos or not.
It is also important to make sure that they do not have a history of hacking and that they have a code audited by qualified companies.
Step 3: configure the parameters and wait
Once the platform is chosen, it is necessary to enable the option to invest the cryptos in decentralized finance protocols (usually we find it in the configuration section).
You will also be able to choose the parameters, such as the amount of cryptocurrencies to be placed and the time spent in a fixed-term deposit.
Based on these choices, the annual return in dollars will be shown.
The interests may vary according to different factors: the chosen platform, the moment of the operation, the cryptocurrency, among others. The average profit today is 5% per year. After completing the parameters, you just have to block and wait to generate the profits.
If you wish, you can easily undo the operation. The funds will be available within an average period of 72 hours, depending on the exchange.
Source: Ambito
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