Many people from emerging markets have begun embracing decentralized finance (DeFi) as the cheaper and more readily available alternative to centralized finance (CeFi). While it may be easy to say that it’s a trend hyped by convenience, it’s surely much more motivated than that: cryptocurrencies provide an alternative to centralized finance that isn’t dependent on the work of middlemen, plowing through red-tape, or a local currency which not only has poor purchasing power but is also prone to inflation.
DeFi makes it possible for a new breed of investors, especially those from emerging economies, to start small, to let the small amount of cash used to purchase their first crypto balloon into a financial reality with more stability and within their control. However, we know that merely buying crypto and leaving it untouched does not earn you any passive income or interest. There is a need to find new sources of income to grow our crypto stack, and blockchain projects respond to this need with crypto rewards.
Simply put, crypto rewards are convertibles awarded by different blockchain programs to users that participate in the blockchain ecosystem by performing specific actions. These rewards may then be added to the user’s stack, earning them more crypto money that they can either invest or convert to fiat money to pay for real-life goods and services.
Now, how and where do you earn these crypto rewards?
Play-to-earn Gaming.
At a time when the DeFi space seemed only accessible for those fluent in IT or those who have done extensive research to participate in it, the introduction of GameFi apps furthered the democratization of the platform by making it appeal to those who may not be adept in the inner workings of the crypto landscape but are very much down to play games — especially those that can earn them money.
When the pandemic hit in 2020, especially implicating the underprivileged and unbanked, a new wave of users was ushered by play-to-earn games like Axie Infinity that started their journeys in the DeFi ecosystem to alleviate their financial woes and help them pay their bills. The sign-up to such games is easy enough, and the collection of tokens from the games is made convenient by its direct connection to your crypto wallet. However, the usual problem Play-to-Earn gamers have is the amount of gas fees they must pay to be able to convert these tokens into fiat money and use them to pay for their utilities. Thankfully, there are available solutions to lessen this and make the most of your gaming tokens.
Participating in airdrops/engaging in communities
You know how some companies would give away free samples of their product at the mall or in your neighborhood to promote it? That essentially is what airdrops are. They are given for free by different cryptocurrencies to promote their coin or tokens. They want you to get a taste of their crypto, see for yourself how it increases value in the hopes that you’ll stick around for more.
Airdrops may be found in several sites, even Reddit and Twitter, but you need to be careful choosing which ones to check out as some posts announcing airdrops may be scams. Sites like www.coinmarketcal.com and www.airdropalert.com may be your safer bets, and finding airdrops in them is easy enough. For CoinMarketCal, for example, all you have to do is input “airdrop” in the keywords dialogue box in the Upcoming Events tab, and it’ll give you all the upcoming aidrops of the next three months. Once you find an airdrop to claim, your browser will automatically ask you to connect to your crypto wallet, follow the next few steps and add the token to your wallet. Take note that it is very important to take extra caution in choosing which platforms you connect your crypto wallets to, so avoid questionable and unknown platforms as much as you can.
Joining trading contests
Crypto platforms find another way to engage with users through crypto trading contests.. They are trading events organized by crypto platforms like Binance and Phemex designed to inspire users to participate more within the cryptosphere by letting them win prizes that vary from tokens to even hardware or gadgets. They come with different prerequisites and rules that challenge users to hone their trading skills and develop better trading strategies. These competitions have different durations. While some of them last for days, some last just for minutes so you have to keep active in the community to make sure you don’t miss upcoming contests.
Staking and liquidity pools
Blockchain technology verifies crypto transactions and the results of this verification process is stored on the blockchain. When you engage in crypto staking, it means you are locking up your crypto assets to be used by the blockchain for validation processes in exchange for future growth. Similar to keeping money in a bank and letting the bank use your money for various purposes like loans, to stake coins is to leave a platform with your crypto to earn interest. The downside to staking though is that due to its passive nature, you will not be in complete control of the coins you staked, and should the value of your coin drop, then so will your interest.
Meanwhile, liquidity pools are pools of assets within a smart contract used for trade, loans and other functions. Some notable examples of liquidity protocols are Uniswap, Balancer, and Bancor. When you invest your crypto in a liquidity pool, you become a liquidity provider and the protocol will give you a cut of the transaction fee profits that is proportional to your invested asset. Like in any form of investment, you should be exposed to impermanent loss when providing liquidity to a pool as you will likely experience a loss in dollar value from time to time with your investment.
Staking and liquidity providing are commonly confused for one another especially amongst those who are new in crypto. To review: staking is to place your coins in a specific place to earn interest and liquidity providing is investing your money in a liquidity pool in exchange for a cut in their transaction fee profits.
Lending
Lastly, another passive way of earning crypto is through lending and there are two possible ways to do this:
First is through centralized crypto lending platforms or lending services where you can deposit and apply for loans. Those who deposit their crypto in such and allow it to earn interest, similar to keeping fiat money to your bank account. This interest then will be paid to your account, with an interest rate that is around 6% to 18% depending on the coin. As always, take caution when choosing a platform because they’ll be holding your funds. Some of the most trusted services are Celsius Network, Nexo, and BlockFi.
Take note, though, that while you may be able to take out your assets whenever you please, because these are centralized platforms, you technically still won’t be in control of your crypto once you’ve deposited them into the platform. Which leads us to another option:
If you want to lend crypto while being in full control of your holdings and want to skip KYC (know-your-customer), you may try decentralized lending platforms. Such allows peer-to-peer or lender/borrower dynamics where you have smart contracts in place of centralized lending platforms, needing nothing else but a Web 3.0 wallet. This way, you are in full control of your crypto and like in centralized lending platforms, you can withdraw your crypto anytime. To check lending protocols and the best rates currently available in the market, you may visit DeFiPulse.
As the DeFi ecosystem continuously grows, it needs to be more inclusive of people from emerging markets for it to be truly democratized. But to those with little to no background in the inner workings of decentralized finance, this new environment may prove to be intimidating if not at all alienating. The different ways to earn more crypto must be made readily available to accommodate these incoming players, yes, but there must also be convenient solutions that ensure they make use of these earnings to the maximum.
XLD Finance provides real-world financial services to people from emerging markets and helps them navigate the crypto landscape through solutions that ensure quick, convenient, and safe movement of assets between crypto and fiat money.
To learn more about the XLD Finance ecosystem and be alerted for future updates, please visit our website, xSpend, or follow us on Discord, Twitter, Medium, LinkedIn, and Telegram.
