Earning Safe Passive Income with Crypto

Building wealth with multiple streams of passive income is our goal. But it’s hard enough generating one stream of income, let alone multiple streams. How can cryptocurrency help?

Savvy investors are aware that a consequential shift is underway in the global financial system. Attitudes towards cryptocurrency are changing. This year has carried near daily news that banks, financial service companies and investment houses are waking up to opportunities in crypto.

But the beauty of cryptocurrency is that it is open to all. There are no background checks and no approval cycles. No middlemen necessary. “DeFi”, or Decentralized Finance is internet-based technology that allows anyone, anywhere, to interact with a new layer of the internet — the financial layer. But why would people do that?

Because for those “in the know”, the New Gold Rush is on. Only instead of pickaxes, it’s enough to have an internet connection, some resolve, and the feeling that your money can do more for you than sit by idly, gathering digital crumbs in a bank somewhere, helping to make other people wealthy. There is a reason why bankers have the nicest cars and houses, and you’re helping make it happen, Jack.

Those who have made it to DeFi asked themselves similar questions. They’ve reflected to themselves, why leave rapidly deflationary currency in the bank, making a pittance in interest while losing purchasing power?

Intrepid users of DeFi know they can convert their money to crypto and start earning as high as 15–20% on stable coins pegged to the US dollar. And yes, you can always convert your crypto back to regular fiat currency.

I get most excited by investing in new forms of long-term wealth assets like Bitcoin and Ethereum. I believe these digital assets will likely underpin much of the future financial system. Ethereum is far and away the most trusted and used global blockchain computer. It has been adopted and built upon by a vast array of companies and institutions , with more coming online all the time. Bitcoin is built to be the world’s reserve currency. Astoundingly, one Bitcoin is currently worth around $50,000, just 12 years after its creation. That the 1st and 2nd largest digital assets are in an investment class by themselves is difficult to dispute.

In short, many are discovering ways to put their money to work, earning safe, healthy passive income in DeFi. It frees them from the shackles of Finance1.0, e.g., putting others in control of their money, and not benefitting from the saved value they’ve set aside.

DeFi platforms with billions of dollars’ worth of staked value, and which offer financial services are now open for business. These platforms are often collections of smart contracts interacting with a network of other platforms, enabling financial instruments like borrowing, lending, and trading across the world.

One of my favorite places to park crypto and generate income passively is Bancor. It enables people to stake their crypto in the platform to be used in Automated Market Makers (AMMs) that facilitate trading for other users. Most importantly for those with long term passive income pursuits, Bancor provides users the option to supply only half the liquidity pool, without incurring impermanent loss.

Say what? Bancor has solved one of the most painful aspects in DeFi liquidity provision, known as Impermanent Loss. Without diving into too much detail, impermanent loss, also known as divergence loss, is a painful occurrence that happens when liquidity providers who are normally required to offer two assets as a trading pool to win trader’s fees, see their assets diverge from each other in value. This means that rather than seeing the total value of their assets increase as they win trading fees, their total balance decreases due to impermanent loss. Bancor is one of the only platforms that allows users to solo stake one crypto asset rather than two of equal value, to be used in a pool. So long as the crypto is staked on Bancor for over 100 days, the danger of impermanent loss is mitigated by Bancor’s built-in safeguards.

Investment in crypto and blockchain technology is no longer seen as risky, but rather as smart and relatively safe by many of the world’s sharpest investors. As it gains traction, new investors come in. It is a rapidly growing and expanding marketplace of value. One that is helping a bold new class grow their wealth passively and more generously than those stuck in the traditional financial system.

For users of Bancor and other DeFi platforms, it feels good to be in control, rather than reliant on banks and other entities to approve usage of our money. The passive income generated is safe, secure, and worth more each day as the world wakes up to crypto.