The bull market may be over, but that doesn’t mean traders should stop investing. Here are some ways to invest in crypto even during a bear market.
Cryptocurrency advocates have for years touted the ability of digital currency and blockchain technology to change the world. However, new projects come and go during each market cycle, and the promised benefits of these “real use cases” are not satisfactory.
While most tokens promise to solve real problems, few achieve this and the rest are just speculative investments.
Here are three things crypto investors can “do” with their coins.
Perhaps the simplest use case offered to cryptocurrency holders is also one of the oldest uses of money in finance: lending.
Since the dawn of the decentralized finance (DeFi) sector in 2020, the ability of crypto holders to lend their tokens in return for rewards has increased.
Blue-chip DeFi protocols like Aave, Maker, and Compound offer decent stablecoin yields, while lesser-known protocols often offer higher rewards to attract liquidity.
Recently, the crypto lending space has expanded into areas normally dominated by traditional finance. This is especially true in real estate, where a number of experimental cryptocurrency-based mortgage and listing platforms are making headway.
Platforms like Vesta Equity and the recently launched USDC.homes offer cryptocurrency holders the opportunity to hedge their assets against long-term returns on a mortgage or loan to their first-time homebuyers.
Another way to use the Hodle Bag is to farm stablecoins. The cryptocurrency market is known for its high volatility and high-risk trades, but earning income from stablecoins is a safer way to grow your portfolio without the downside risk associated with investing in Bitcoin (BTC) and altcoins.
In bull and bear markets, DeFi protocols require liquidity to function properly, and the integration of stablecoins on centralized and decentralized exchanges has helped the market mature and remain reasonably liquid.
Platforms like Curve Finance, Beefy Finance, and Trader Joe offer income from stablecoin liquidity pools, and interest rates can be as high as 20% per year.
See also: Bipartisan Act Granting CFTC Authority Over Exchanges and Stablecoins
Lossless Token Offerings
Another way to “use” cryptocurrencies is to participate in lossless token offerings that are being rolled out across the ecosystem.
An example of a lossless token offering is the parachain auctions that take place on the Polkadot and Kusama networks. This type of protocol launch allows investors interested in supporting the project to lock down DOT or KSM for a period of time as a form of project security.
Participants will receive their own token of the newly launched protocol in exchange for locking their investment in the project’s smart contract. After the allotted lock-up period expires, the total holding of tokens will be returned to the depositor, meaning they will keep their original assets and also add new assets to their portfolio.
Lockdrops are another example of this type of lossless token offering. One of them was recently used in the launch of Astroport and Mars Protocol.
Lockdrops are also called airdrops because they don’t technically help projects raise funds, but require a certain level of commitment to future use by token recipients. While airdrops simply distribute tokens to subscribed users, lockdrops require stakeholders to commit to locking up some liquidity that can be used by a project during its initial launch.
Astroport’s launch included a new liquidity bootstrapping phase, where contributors could provide pairs of liquidity pools in exchange for a higher reward. Once blocked, participants receive a one-time blocking reward which they can store, trade or use to provide liquidity.
Liquidity providers also receive trading fees and other incentives depending on the liquidity pool they are in to improve the opportunity cost of providing that liquidity.
After the agreed blocking period has expired, users can withdraw the liquidity.
No-loss token offerings give long-term crypto owners the opportunity to buy tokens for newly launched protocols i