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Several cryptocurrency savings products give you 6% or more in annual rent, if you deposit cryptocurrency into a locked contract. Among the biggest players in this little one we find Compound, Blockfi and MakerDAO.

Want to get back to the valuable spot in blockchain savings products passing $ 1 billion, and the growth in this picture was 137.2% in 2019. How can you, as a beginner make over 6% to save on cryptocurrency?

Locked contracts

The vast majority of cryptocurrency savings providers do this through automated contracts. You need to acquire cryptocurrency like Bitcoin or, for example, Ethereum, which you deposit into a savings contract. This will then be locked out for lending, which means that as soon as you withdraw the money, the interest is acquired as well.

Your locked cryptocurrency is lent to professional players, or otherwise released to those who pay for loans. For example, a crypto exchange may be a loan customer who needs to borrow Bitcoin because trading customers on the stock exchange have wanted to “shift” their position.

The trading customer pays interest or fee to the crypto exchange, which in turn pays the savings product for the loan. Finally, you sit and earn good interest on the fact that a trading customer on a foreign exchange platform wants to pay to borrow your Bitcoins.

Measured against normal banking

This is just the way it is in the normal banking world, where you as a deposit customer receive interest on the money that is lent to the mortgage. The difference is that margins in the traditional financial world fall to the bank, and interest rates have historically been low since the financial crisis. This is due to continuous printing of money from central banks

In the crypto market, there are often restrictions on inflation and the number of tokens. For example, there will never be more than 21 million Bitcoins. If you have to borrow Bitcoins, you depend on someone borrowing this, and then the interest rate has ended at between 6-9%.

It is considered a very good return and makes you double your money in 10 years due to the interest rate.

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