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How to Generate Returns on Your Crypto Investment

by Erica Farmer
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Crypto Investment

The world of crypto can seem daunting to navigate and challenging to predict. However, with new blockchain-based projects and new tokens being produced regularly, there have never been more significant opportunities for investors to enter the space.

If you’re considering making a cryptocurrency investment, it’s essential to understand your options for generating returns, particularly if you intend to hold your coin for an extended period. Here are a few investment options that could help you generate value on the blockchain.

Selecting a Token

The first step when making successful crypto investments is to have a solid understanding of tokenomics and the unique benefits of the cryptocurrencies available to you.

Tokenomics has to do with the rules, regulations, incentives, and benefits built into the design of a new crypto token. Each token is designed uniquely; you can look at the coin’s whitepaper to learn more about the motivations and goals behind the design of the token. The long-term success of your investment will depend on the success of the blockchain project behind that token

. Do your research to keep up with the latest coin value and join an online community where you can see the popularity or drawbacks of each blockchain project. Crypto communities like FTX can offer you quick and vital information like the Solana price at any moment. They can also provide a wide range of crypto resources and a broad knowledge base to help you stay connected and up to date.

Stake

Once you’ve selected your token, you have a few different options for long-term investment. Staking your crypto is one option to generate returns on your holdings over time.

If the blockchain you selected to invest in runs off of a proof-of-stake model like the Cardano blockchain, you have the opportunity to stake your coins. Coin holders like yourself can put their coins in a stake pool as collateral for a chance to be selected to verify a block of transactions.

For each successful block verification, that node receives rewards back, which are distributed amongst the other coin holders in the pool. The more coins staked with a particular pool, the more likely that node will be selected to verify more blocks. Staking could generate lucrative rewards if you intend to hold your coin for an extended period.

Yield Farming

Yield or liquidity farming is another excellent option to generate returns on your crypto investment. You can join a yield farm and enter your crypto into a liquidity pool through a smart contract.

The smart contract ensures you cannot pull your coins for a certain period once you enter the pool. Your coins will be lent out to borrowers on the network during this time. Risk is involved in lending money, including cryptocurrencies, so be sure to select a healthy liquidity pool. The more cryptocurrency is locked into the liquidity pool, the more likely successful farming will occur.

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NFTs

Non-fungible tokens are immutable, encrypted records of ownership that are secured and traded on the blockchain. NFTs can represent any asset and could even contain an encrypted file of the digital asset itself.

NFTs can be used in many different industries, but for investors, the digital art NFT marketplace is a booming area to look into. The NFT marketplace has been endorsed by famous celebs and artists like Snoop Dogg and others in recent years. The most expensive NFTs have sold for millions of dollars.

Investing in NFTs is like investing in art or other property. If you’re able to select the right collection to invest in, you could stand to make a large margin of profit in the long run, as the NFT

appreciates.

Investing in the NFT market has its own risks, like any investment, but could prove highly lucrative, especially if you are already familiar with the world of collectors.

These are just a few popular ways investors generate returns on their investments over time. IF you want to enter the crypto space, be sure to join an online community like FTX, and do your research before you open your digital wallet.

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