There are several exciting projects in the DeFi crypto space for those looking to invest with stablecoins. With the rise of scams in DeFi protocols, it is recommended to pick projects with strong fundamentals, great long-term growth prospects and a reliable team managing them. Furthermore, investors should take note that investment decisions based purely on yield offered may be misleading – while the stated annual percentage might be high, the available staking period for the stablecoins could be low. For instance, a project which offers 150% yearly interest might only have a staking period of 2 days, leaving investors with a less than desired portfolio growth. When a project seems too good to be true, it often is.
Here are 3 DeFi crypto projects investors can consider participating in to earn passive income:
BlockFi offers a range of crypto financial services on their platform, including a cryptocurrency exchange, interest-bearing accounts, and low interest loans. The protocol allows investors to earn interests on their cryptocurrency holdings by lending stablecoins to other traders on their platform. Investors can expect 3 – 8.6% compounding interest with no hidden fees and minimum balance. It is US based and operates within US federal and state regulations.2. Compound Finance
Compound Finance is a DeFi crypto lending protocol to allow users to lend and borrow cryptocurrencies. The platform leverages audited smart contracts, and even created a dedicated forum to encourage users to share and contribute ideas. It is a US based company, and it has undergone several security audits by reputable agencies such as Open Zeppelin. It currently supports assets that are limited to Ethereum-based tokens, and investors can lend DAI, USDC and USDT to the platform to earn passive income.3. ShuttleOne
ShuttleOne is a Singapore based company which provides financial services on collateralized assets. ShuttleOne serves government-related entities and e-commerce giants through its trusted blockchain network, and has since disbursed close to $3.5 Million of credit to businesses across Asia.
Through the ShuttleOne liquidity pool, investors earn loan interests in a simple and straightforward way when they lend crypto. Investors add stablecoins liquidity at ShuttleOne Liquidity Pool , and are rewarded with SZO tokens on top of the interest earned from the crypto loan. The ShuttleOne network accepts stablecoins in the form of lending DAI, USDC and USDT.
With this additional step, investors leverage on the already available assets to grow their portfolio in DeFi crypto.
Conclusion: Which DeFi project to choose
In summary, Blockfi and Compound offer interest rates by lending your stablecoins to other traders for leverage. For BlockFi, interest rates are not fixed and would change at their discretion. For Compound, they practice a dynamic interest rate which is dependent on the current liquidation and borrowing rate on the protocol. The interest rates of BlockFi and Compound fluctuates based on market demand, and does not guarantee fixed earnings. In comparison, ShuttleOne lend stablecoins to real-world businesses in the global trade industry. They are able to provide a stable 10% APY interest rate as the loans are backed by real world assets. Furthermore, the company does not practice dynamic interest rates.
Among the 3, ShuttleOne has a competitive advantage as the platform can liquidate collateralized assets should a borrower default on its loan. While providing a stable 10% interest rate, it protects investors’ interest knowing the liquidity pool is asset-backed. When the crypto space is ever volatile, ShuttleOne remains stable. It is important to do your due diligence when deciding on a crypto project, and more so when earning passive income is part of your long-term growth strategy.
A combination of dollar cost averaging and crypto lending to a liquidity pool is the best strategy for an investor to earn passive income. Investors can hedge against volatility, and yet enjoy dividend gains at the same time. Speculative investing to DeFi protocols is not recommended, and investors should consider asset-backed projects like ShuttleOne. This strategy is best implored with long term financial goals, and to stay vested in a DeFi crypto liquidity pool.