Staking – the classic
The classic way to increase your crypto capital is staking. You deposit your coins in the smart contract and receive regular rewards in the form of other cryptocurrencies. This also supports the Proof of Stake crypto consensus. Since this is a little more complicated in practice, most brokers and exchanges offer this service.
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For comparison
Lending: Lend your cryptocurrencies
Lending is quite similar to staking, at least from an investment perspective. You lend your coins to other users and receive interest in return. However, since you do not store these in a smart contract like with staking and therefore no longer have access for a while, lending is much more flexible than staking. The counterpart to lending is borrowing, i.e. borrowing cryptocurrencies for fees. Most brokers and exchanges also offer this service.
Liquidity reduction
Liquidity mining is a phenomenon in the field of decentralized finance. You also lend money here. However, this is provided for a decentralized exchange (DEX) and not for individual users, as is the case with lending. Anyone who does this is usually rewarded with cryptocurrencies.
Yield farming
Yield farming is the supreme discipline among the options for generating passive income in the crypto space. Here, resourceful investors combine various options from the area of decentralized finance to farm “yield”. For example, you borrow cryptocurrencies via borrowing and use them elsewhere to carry out liquidity mining. The tokens you get for this are used elsewhere for lending. This is certainly the most complex method to increase your crypto capital.
Conclusion at this point: If you want to get started, you could start with staking and lending.
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