The question of whether or not it is viable (or even possible!) to receive liquidity in cryptocurrencies without selling has been asked by countless investors over the years. This article will explore the pros and cons of this strategy, as well as how you can make it work for your investments.
Staking Cryptocurrencies
One way to receive liquidity on crypto without selling is by staking cryptocurrencies. Staking, also known as “Proof-of-Stake” (PoS), is a consensus mechanism that rewards participants for holding and validating transactions on the network. By staking their coins, investors can earn rewards in the form of newly minted coins or transaction fees. This is a great way to receive liquidity without having to sell off existing holdings, as the rewards can be withdrawn at any time.
However, it is important to note that staking has its own risks and rewards. The main risk associated with staking is that the coins used for staking may be subject to price fluctuations. Therefore, investors should always do their research before staking their coins and make sure they understand the risks involved.
Liquidity Mining
Another way to receive liquidity on crypto without selling is through liquidity mining. This is a relatively new concept in which investors can earn rewards by providing liquidity for certain markets or pools of assets. By providing liquidity, investors are essentially helping to create an active market for trading, allowing for more efficient and profitable trades.
In return for their service, investors can receive rewards in the form of newly issued coins or transaction fees. This is a great way to earn liquidity without having to sell off existing holdings. DEXs often require users to provide some liquidity to start trading, and the rewards received from liquidity mining can make this process easier.
Borrowing With Crypto As Collateral
Finally, another way to receive liquidity without selling is by taking out a loan with cryptocurrency as collateral. By doing this, investors can use their crypto assets as security for the loan and receive fiat currency in return. This money can then be used to purchase additional assets or pay off other debts.
Liquidation of collateral is a real risk. Volatility in the crypto market means that if the value of an investor’s collateral falls below certain thresholds, it may be liquidated to cover any outstanding loan. This is something investors should keep in mind before taking out a loan with cryptocurrency as collateral.
Final Thoughts
There are numerous ways to receive liquidity on crypto without selling, such as staking, providing liquidity and borrowing. Each of these methods has its own set of benefits and drawbacks, so it’s important to understand them before deciding which is best for your needs.
No matter which strategy is chosen, it’s important to consider using the most secure crypto portfolio management software. Moonrig.io’s capabilities enable users to monitor crypto in real time and get instant notifications about price changes, transactions, and more.
