Autor Cointelegraph By Dilip Kumar Patairya

How to buy NFTs on Solana?

How to buy NFTs on Solana?

Uverejnil používateľ | jún 7, 2022 |

The burgeoning popularity of nonfungible tokens (NFTs) has led to issues like exorbitant transaction fees and congestion in the prevalent Ethereum-based ecosystem. The fee factor serves as a major deterrent to anyone wanting to execute transactions on the blockchain.A report published by Reuters revealed that the NFT sales volume was $24.9 billion in 2021, considerably more than the $94.9 million in 2020. The number of wallets trading in NFTs jumped to about 28.6 million, from a modest 545,000 in 2020. Recently, when Bored Ape minted its NFTs, the gas fee surged to $3300, showing a glimpse of how bad the costs were on Ethereum (ETH).Related: The NFT marketplace: How to buy and sell nonfungible tokensSolana (SOL) has emerged as a prominent challenger to Ethereum, performing amazingly better on two key metrics, speed and transaction cost, thanks to an innovative proof-of-history (PoH) timing mechanism along with a proof-of-stake (PoS) protocol structure.In this article, we will discuss the advantage Solana has over other blockchains and marketplaces as well as how to buy NFTs on Solana.The Solana advantageThis blockchain clocks block time (0.4 seconds) and block size (20,000 transactions) compared to Ethereum (block time: 13 seconds, block size: 70 transactions) allowing the network an incredibly low gas fee of just $0.00025 per transaction.The arrival of solutions like Solana enables buyers to purchase NFTs with a negligible transaction fee or few congestion issues. Practically, it means that Solana or SOL NFTs are more easily accessible than those on Ethereum.In the second half of 2021, the price of Solana NFTs began picking up. A Degenerate Ape NFT sold for around $1.1 million in September 2021, becoming the first million-dollar NFT sale on the Solana network. In October 2021, a Solana Monkey was sold for $2 million.Solana NFT marketplacesIf you are wondering where you can buy Solana NFTs, marketplaces are the answer. All functions related to NFTs such as minting, buying, selling and trading occur on specific marketplaces. This is quite like the usual cryptocurrencies, which are managed through exchanges and crypto wallets. OpenSea is the most popular NFT marketplace on Ethereum. SolSea, Solanart and DigitalEyes are three prominent marketplaces that support Solana NFTs. SolSea enables creators to choose and embed their licenses while minting NFTs. On Solanart, you can find, collect and trade NFTs. DigitalEyes is a popular platform featuring collections like the Solana Monkey Business and Frakt.How to buy Solana NFTsBusy thinking about how to buy and sell Solana NFTs? Purchasing NFTs on Solana involves a few steps, as explained below:Get a Solana walletThe first step you need to take is to get a Solana-based wallet. Two better known wallets are SolFlare and Phantom. Advanced users may use Sollet, an open source wallet. Each of these NFT marketplaces have collections, fees and terms to work that you need to take into account. So, you need to do adequate research at your end before committing your funds.Create a new wallet on your chosen solution and connect it with the Solana marketplace you have selected. The website of the market place will guide you through the process.An important thing to remember, don’t try to do anything on Solana via Metamask, a popular wallet on Ethereum, or else your SOL will disappear forever as MetaMask doesn’t recognize SOL tokens. Phantom is the Metamask of Solana Network.Get SOL coinsYou have to use SOL cryptocurrency on Solana NFT platforms, just like you use ETH on Ethereum-based marketplaces. SOL coins are for sale on various exchanges. The typical process involves connecting your fiat account with the exchange, moving funds and purchasing the required SOL amount. You need to withdraw this SOL to your wallet address.To be on the safe side, withdraw just what you need for buying the NFT. For instance, in case an NFT is available for 15 SOL, you may withdraw exactly that amount along with the transaction fee needed. Alternatively, you can change your stablecoins to SOL on an exchange and move the currency to your wallet address.Related: Altcoins vs stablecoins: Key differences explainedDevelop a strategyWhen it comes to NFT investment, there is no singular strategy. In line with your goals, you have to come up with your own. Collectibles are in demand as are artworks, achievements and other assets associated with renowned personalities as they help fans to feel connected with them. For someone interested in games, there are plenty of NFTs of sports stars or games memorabilia to make them feel elated and earn income as well.While buyers are putting in their funds for earning a profit, you may also prefer to ensure that your investments align with your interests. Someone who is fond of playing games will surely want an NFT right from a popular game, probably a reward NFT. And if you like spending time on metaverses, you may want to get one from the one you simply love hopping to.Finding what is trending on the Solana marketplaces will help you zero in on the pieces that are likely to get maximum traction. If you aren’t very used to the NFT world, this will help you to get a feel of the NFt world.Buy your NFTsWhatever platform you choose, you might like to check out the latest or trending NFTs. Go through as many collections as you can before arriving at a decision. If you want to keep the costs low, include this criterion in the filter when searching for top Solana NFTs.Just click on the NFT and go through the information available about the piece. Become apprised of the information like the owner of the NFT, the price and the offer you will make once the wallet connection is set.Solanart, the most stable of the NFT marketplaces on the network, takes around 20 seconds from start to finish and less than half a dollar transaction fee. The price history of all collections is available on the marketplace. Solana NFT marketplaces may still be nowhere near OpenSea, which has been around since 2017, but they are soon catching up.Update walletOn most wallets, you will find a Buy button that you need to click. The wallet will then usually seek approval of the purchase. It will show you the amount you are going to spend as well as the transaction fee you will incur. Once you approve and make the purchase, you can see it residing in the relevant section. On the Phantom wallet, for instance, it gets transferred to the Collection section.The process is quite straightforward and you shouldn’t have any problem in completing the transaction after transferring SOL into your wallet. A reason for the growing popularity of Solana platforms is that they are simple to use.The days aheadThe NFT revolution has just begun and there are still miles to go. As the ecosystem progresses, more marketplaces will emerge. We can say for sure that these marketplaces will be better than the current lot. User interfaces will be more intuitive and a wider range of features will be available, adding up to user experience.As the Solana community progresses with time, the number of NFT buyers will grow as well, giving a fillip to the growth potential of your NFT values. Just make sure you buy each SOL NFT only after giving it proper thought and you should do fine.

Čítaj viac
What is ApeCoin and how does it work?

What is ApeCoin and how does it work?

Uverejnil používateľ | máj 29, 2022 |

The first quarter of 2022 was abuzz with the talks about ApeCoin (APE), a cryptocurrency adopted to be the native coin of Bored Ape Yacht Club (BAYC), developed by Yuga Labs. Since the ApeCoin DAO came into being in April 2021, the BAYC has been among the top nonfungible token (NFT) collections with a vibrant community.The BAYC collection showcases apes that seemingly look bored. Depending on your mood and choice, you can choose these apes down to the tiniest details. Investors across the world have put their money into these artworks and the buyers include the likes of Justin Bieber and Eminem.As an ERC-20 governance and utility token of the APE ecosystem, ApeCoin is administered by a decentralized autonomous organization, or DAO. Anyone holding the coin is allowed to cast their vote on the relevant governance decisions.Related: Types of DAOs and how to create a decentralized autonomous organizationThe fact that APE is adopted by Yuga Labs gives it heft, as it also has CryptoPunks and Meebits, two other frontline NFT projects.What is the APE ecosystem?You might be interested in who is behind ApeCoin. The community holders of ApeCoin and various products/services using the cryptocurrency collectively make up the APE ecosystem. Yuga Labs, founded in 2021 and headquartered in Miami, Florida, is a prominent name in NFTs and digital collectibles. Acclaimed as a creator of the Bored Ape Yacht Club, Yuga Labs serves as a community member in the ApeCoin DAO. They have adopted ApeCoin as their primary token in the projects they undertake. Let’s learn concise information about the NFT collections that are a part of the APE ecosystem.The BAYCLaunched in April 2021, Bored Ape Yacht Club (BAYC) features 10,000 unique Apes residing on the Ethereum blockchain. Each of these unique digital collectibles features a different look, style and rarity. The collection showcases algorithmically generated profile pictures of cartoon apes.Mutant Ape Yacht Club (MAYC)As an NFT basket of up to 20,000 mutated versions of the BAYC Apes, the MAYC helps onboard new members to the Ape community. Original BAYC NFT holders were handed 10,000 mutant serums in three tiers via airdrop to add the rarity of traits.Bored Ape Kennel Club (BAKC)Launched at 6:00 pm EST on June 25, 2021, the Bored Ape Kennel Club (BAKC) is an assortment of dog NFTs made available to every single member of the BAYC. Holders of each Bored Ape NFT can adopt a random Club Dog NFT, while just paying for gas. BAKC NFTs also have their own rarities.Otherside metaverseAt the end of April 2022, Yuga Labs began minting Otherside metaverse lands. Within 45 minutes, the virtual real estate clocked the value of $100,000 and raised a total of $320 million, making BAYC the NFT garnering the maximum sales.How does APE work?APE token holders take governance decisions collectively, casting their votes and deciding on issues like allocation of funds, framing of rules, partnerships, project selection and more. The ApeCoin Foundation implements the governance decisions taken by the community.As the legal representative of the DAO, the ApeCoin Foundation facilitates the growth of the ecosystem. The Foundation has a special body called the Board that executes the community’s visions. The APE Board comprises five members from the technology and crypto community. ApeCoin holders vote for the new Board members annually.Related: The impact and rise of DAOs in the legal industryWhat will ApeCoin be used for?As a governance and utility token, ApeCoin serves multiple purposes in the ecosystem. ApeCoin use cases include enabling holders to participate in the governance of the DAO and enabling them to access exclusive features of the ecosystem, such as games, events, merchandise and services.Designed identically to any other Web3 coin, ApeCoin can be used for payments. ApeCoin is technically acceptable by most merchants because it is a pervasive ERC-20 token. The coin is also already in use as NFT rewards, and holders with the BAYC receive free APE that they can immediately cash.Third-party developers use ApeCoin to play a role in the ecosystem and incorporate the token into their services, games and various projects. For instance, in Animoca Brands’ Benji Bananas, a play-to-earn (P2E) mobile game, the coin is adopted as an incentive for players. They will be able to earn special tokens when playing and swap these tokens for ApeCoin.With ApeCoin set to be integrated with the upcoming metaverse Otherside, which could make it a high-in-demand metaverse coin this year. This will make ApeCoin a transaction token on metaverse marketplaces. If the Metaverse incorporates P2E elements, it might also be used for rewarding players.ApeCoin tokenomicsApeCoin has a total supply of 1 billion tokens. The contract interface disallows the minting of any more tokens, thus instilling a cap. There is no burning mechanism as well, so the supply won’t go down. The distribution of the available tokens is as follows:62% of the tokens are allocated to the ApeCoin DAO community. Between it, 15% finds its way to holders of BAYC and MAYC. Holders of BAYC can claim 10,094 APE for each NFT they own, while MAYC holders are entitled to 2,042 APE. The remaining part will be released as a component of the DAO’s ecosystem fund.16% of the tokens will flow to Yuga Labs. A part of this allocation will go toward the primatologist Jane Goodall’s charity foundation. 14% of the tokens are for the people who contributed to the launch of the ApeCoin protocol. 8% of the tokens have been set aside for the four founders of Yuga Labs and BAYC. ApeCoin follows the concept of locked tokens to prevent Yuga Labs, the founders of BAYC, and other launch contributors from selling their holdings. ApeCoin allocations to them aren’t unlocked for at least 12 months. After this duration, a specific allotment of tokens becomes accessible to them on a monthly basis.How to buy ApeCoin?You can buy ApeCoin on a crypto exchange, generally through a three-step process:Sign up: On the sign-up page, put in your email address, contact number and a user name. The system will verify your email ID and prompt you to enter a strong password.Complete KYC: Most regulatory domains require the users to complete the Know Your Customer (KYC) process. You will need to upload your ID and other required documents, and your account will get going in a few minutes.Buy ApeCoin: You can now deposit your fiat and buy as many ApeCoin as you want. Is ApeCoin a good investment?The fact that ApeCoin has been issued by a dynamic online community like the Bored Ape Yacht Club has given it streams of takers right from the start. Aficionados of arts, culture, gaming and entertainment are more likely to use the cryptocurrency. Metaverse land sales will also boost the coin.There are several reasons to purchase ApeCoin such as using APE as a payment option, NFT rewards and to access exclusive features in the APE ecosystem provides the buyers several reasons to purchase it. All these factors notwithstanding, the coin is intrinsically associated with NFT-related volatility, which you need to be careful about.The way aheadAt a time when NFTs are still storming the crypto arena, ApeCoin has managed to steal the limelight since its appearance. The token creators have used several incentives to promote its utility such as allowing the third-party developers to integrate the cryptocurrency into their projects and setting up an ecosystem fund to support the projects using the coin.With use cases spanning from decentralized payments to land sales on metaverse, the company has a range of supportive components in place. As the APE ecosystem grows, ApeCoin earns more value than can be realistically expected.

Čítaj viac
Life-changing money: The 10 most expensive NFTs sold to date

Life-changing money: The 10 most expensive NFTs sold to date

Uverejnil používateľ | máj 16, 2022 |

Nonfungible tokens, or NFTs, are turning out to be a treasure store with prices striding into the millions of dollars. Instances of an NFT garnering more than $69 million or a tweet fetching $2.9 million are not a fantasy, but an incredible reality.In 2021, an NFT by digital artist Beeple, or Mike Winkelmann, sold for a whopping $69 million, making NFTs a media hotshot and opening the floodgates for a string of other NFT sales, many of these in millions of dollars. Prompted by the plentiful talk about NFTs, stars like Paris Hilton, Lindsay Lohan, Eminem, Grimes and many more have hopped onto the NFT bandwagon.In 2022, NFTs have been garnering attention from investors, artists and collectors alike. Let’s take a glance at the 10 most expensive NFTs sold to date:Beeple’s Crossroads — $6.6 millionSold via Nifty Gateway, Beeple’s NFT Crossroads came as a response to the 2020 United States presidential election. The piece shows a despondent figure, supposedly Trump, lying on the ground and symbolizing the former president after losing the election.Crossroads also featured two videos, one with a triumphant Trump and the other a solemn one. What would eventually play depended on the outcome of the election.Ocean Front — $6 MillionAimed at the climate crisis, the Ocean Front depicts a tree atop trailers and shipping containers stationed on a platform. Captioned “together we can solve this,” the NFT was auctioned for charity and the beneficiary was the Open Earth Foundation, a nonprofit organization.One of the most valuable NFTs of the time, the Ocean Front, started bidding at $2.77 million. The winner of the bid was Justin Sun, the founder of the Tron Foundation.Right-click and Save As Guy — $7.08 millionSnoop Dogg bought XCOPY’s NFT Right-click and Save As Guy, created as a satire of people who don’t recognize the worth of crypto art. Right-click and Save As Guy serves as a reminder that it is the receipts associated with the art that cannot be copied, thanks to blockchain technology and not the image itself.CryptoPunk #7804 — $7.57 millionCryptoPunks are an assemblage of 10,000 unique characters hosted on the Ethereum blockchain, and no two CryptoPunks exactly resemble each other, making them highly valuable. CryptoPunk #7804 stands out for having some rare traits across the whole collection.These traits include Alien skin, possessed only by 0.09% of the collection. A pipe is another feature, present with only 3% of the collection. The small shades are yet another feature that only 4% of the collection has. There is the “cap forward” trait as well, which is on just 3% of the NFTs. These attributes make CryptoPunk #7804 such a rarity, making it one of the highest-selling NFTs.CryptoPunk #3100 — $7.58 millionAs one of the nine Alien Punks, CryptoPunk #3100 features the Alien skin as well, which is a major factor pushing the token’s value up. The NFT with bluish-green skin also gets a unique look with a white-and-blue headband. The fact that only 406 out of 10,000 in the collection wear a headband underlines its rarity.First released in 2017, CryptoPunk #3100 gained prominence with a $2 million bid in March 2021 and was eventually bought at $7.58 million in the same month.CryptoPunk #7523 — $11.7 millionLike other expensive NFTs in the series, CryptoPunk #7523 has a gamut of rare features as well. It is a component of the Alien sub-collection. CryptoPunk #7523 stands out with three attributes possessed by 24% of the collection and an earring, which is only in 25% of the collection.Other rare features include a knitted cap, while the medical mask is shared by only 2% of the collection. But, even with these rarities taken into account, the price of $11.7 million that it fetched is mind-boggling.Human One — $28.9 millionDesigned by Beeple, Human one is a digital and physical hybrid piece of artwork. A peculiar fact about Human One is that its artwork keeps changing over time. Beeple retains remote access to the artwork and updates it periodically.The NFT showcases an astronaut ambling through the different backgrounds that change over time. Experiments fusing various TVs into different shapes and patterns influence the appearance of the NFT.Clocks — $52.74 millionClocks was meant to raise funds to defend Julian Assange after his controversial imprisonment in May 2019. He was facing charges of espionage due to his association with WikiLeaks, a website he founded. The clock showcases the number of days Assange had been behind bars.Over 10,000 supporters own a share of the NFT that carries a price tag of $56 million. The beneficiary of the NFT was the Wau Holland Foundation, which has been supporting Assange’s cause.Everydays: the First 5,000 Days — $69.3 millionAnother creation of Beeple, the First 5,000 Days, is a colossal compilation of 5,000 pieces of artwork that differs in terms of content, medium and style that Beeple made every day starting in 2007. Often relying on dystopian or satirical settings, these art pieces have been highly appreciated by aficionados.To date, it has been the most expensive collage of NFT art pieces ever sold to one sole owner.The Merge — $91.8 millionCreated by artist Pak, The Merge occupies the top position as the most expensive NFT ever sold. Though the artist has never revealed their actual identity, they have a huge presence in the digital art space.The Merge isn’t a static art piece, but a mash-up of “masses” that anyone interested could buy. When starting, the NFT consisted of three large dots against a black background. The size of the dots increased as the number of buyers went up.The way aheadA few months into 2022, NFTs are still going strong. With no caps on how high NFT prices might go, this domain within crypto presents a lucrative opportunity for anyone, who could manage to mint into the right projects and exhibit some patience.

Čítaj viac
How to avoid front runners on decentralized crypto exchanges

How to avoid front runners on decentralized crypto exchanges

Uverejnil používateľ | máj 7, 2022 |

Decentralized exchanges (DEXs) nip in the bud several issues concerning their centralized counterparts such as concentration of liquidity in the hands of a few players, compromise of funds in case of a security breach, closed control structure and more. One issue, however, that has refused to subside is front-running. Unscrupulous players are still finding ways to defraud unsuspecting traders.If you have received less than expected when placing a trade on a DEX, there is a pretty good chance of you getting hit by front runners. These bad actors exploit the automated market maker (AMM) model to make profits at the expense of unsuspecting traders. This article will explain the attack vector and help you understand the basic concept of front-running in crypto trading, the potential consequences and how to prevent crypto front-running.What is front-running in crypto?The term “front-running” refers to the process when someone uses technology or market advantage to get prior knowledge of upcoming transactions. This allows the bad actors to take advantage of the forthcoming price movement and make economic gains at the cost of those who had introduced these transactions. Front-running happens via manipulations of gas prices or timestamps, also known as slow matching.On centralized as well as decentralized exchanges, front-running is a frequent activity. The objective of a front runner is to buy a chunk of tokens at a low price and later sell them at a higher price while simultaneously exiting the position. When executed precisely, it brings in risk-free profits for the traders committing it.Related: DeFi vs. CeFi: Comparing decentralized to centralized financeTrading of stocks and assets based on insider knowledge to take advantage of the price movement has been a well-known tactic. Though illegal and unethical, brokers have been engaging in it. The tactic closely resembles insider trading with just a minor difference that the executioner works for the client’s brokerage and not the client’s business.What is a front-running bot?Frontrunning is done using crypto front-running bots functioning on a millisecond-scale timeframe. Before a person blinks, they can read a string of transactions, calculate the optimum transaction size and gas price, configure the transactions and run them.The core of a front-running bot functions by listening for the pending transaction on the blockchain. Interacting with the blockchain using an interactive script, the bot buys before the buyer and sells right after it. The bot analyzes the trends of the crypto and executes transactions to make a profit. Front-running tactics on decentralized exchangesWhen a trade occurs, the system broadcasts it to the blockchain, requiring miners to verify the transaction. However, in any blockchain of significance, the stream of incoming transactions is more than the capacity of the subsequent block. Unmined transactions are left in a pending transaction pool called a mempool.Blockchain mempools are transparent, a feature that the front runners exploit. Getting insight into the mood of the traders, they are able to predict the upcoming price movements and place their own orders accordingly. They set a higher gas price on their transactions to encourage picking their transactions before the pending ones, thus front-running the unsuspecting traders. Ways to prevent front-running on the trader sideThere is no single solution to solve issues regarding front running on all platforms. Rather, various anti-front-running approaches need to be followed on different projects, depending on the scenarios.Use large liquidity poolsFront runners are fond of low liquidity pools, as there is less chance of competition as well as disruption of their transaction by a large order that unexpectedly alters the pool weighting. Executing your trades in large liquidity pools makes it less likely to get hit by frontrunning. Keep maximum slippage lowDoes the question “How do I avoid slippage” perennially pricks you? What you can do is set a maximum slippage tolerance in most decentralized exchanges. In other words, you can fix the maximum deviation from the expected return. An example will help you understand the scenario better.Suppose you place an order on a DEX and expect a return of 500 Tether (USDT) for it. If you set your slippage to 1% of your order, then you won’t be receiving less than 495 USDT. However, if higher slippage tolerance is greater, there will be more deviation.So, the formula is simple: Keep maximum slippage low, around 0.5%-2%, to fend off front runners. If you are going to place a large order, keep your slippage at the lower keel. Front runners want you to keep slippage high, so better to do just the opposite of it. Overpay on gasFront runners are delighted to see slow transactions because it gives them more time to devise an order for riding your trade and making profits. Underpaying on gas makes your transactions queue up for longer, providing front runners more time to formulate their strategy and damage your interests.Overpaying on gas motivates miners to validate your transaction faster, minimizing your odds of becoming the target of a bad actor. For this purpose, you might set the gas price to higher than average or simply use the fast gas option on your wallet. If you are placing a large value order, it becomes even more important to try and complete the transactions with alacrity. Place a low-value orderTo make a profit, front runners have to meet some minimum thresholds. They have to pay the gas fees twice, on entering and exiting the market, and also recover the amount paid as the trading fee. Their profits begin only after they get back their expenses.Currently, prominent Ethereum-based automated market makers such as Uniswap, Balancer and SushiSwap pay a gas fee of $25 per transaction. As they need two transactions to execute frontrunning, they are likely to spend $50 to complete the trade. It also means if your trade is raking in less than $50 profit, there are negligible odds of you becoming the target of the frontrunners.When you enter a low-value trade, you practically make it an unprofitable venture for frontrunners. Most of the time, trading with amounts under $1,000 is safe. Find a takerA publicly-hosted order book is the first thing to draw front runners. If you manage to find a taker, you will be able to fill a given order and will be able to keep away from public markets and, subsequently, front-running. When you find a taker and negotiate a price successfully, a trustless on-chain exchange gets executed. Ways to prevent front-running on DEX sideDEXs can take care of several design points to make front-running difficult to execute:Quick matchingFront runners look for slow matching speed to place their orders before the execution. A DEX can ensure fast matching to leave little room for front runners to put their process to motion. Super quick block time will effectively make the front runners unable to react. For most frontrunners, who are not so technically inclined, this should be enough.Decentralized match engineIn the case of a centralized matching engine, it is hard to establish that the exchange itself is not involved in front running. Decentralized matching engines, on the other hand, allow anyone running a full node to view the matching in real time. They can match the transaction in the latest block manually with the current order book. Periodic auction matchingPeriodic auction matching adds an extra layer of security from the front running. It adds a non-deterministic layer making it improbable for anyone to know the next execution price unless they are aware of the matching logic, the incoming orders for the next block and the trade price and the current order book from the last match. How to avoid front-running in Ethereum 2.0Some traders wonder about the impact of the full release of Ethereum 2.0 later in 2023, merging the mainnet with Beacon Chain and introducing a proof-of-stake (PoS) consensus mechanism. Validators who are supposed to process transactions in an epoch will be intimated of their positions beforehand.An epoch is a defined span of time in a blockchain network. This time frame is used to describe when certain events in a blockchain network will take place, such as when incentives will be distributed or when a new group of validators will be allocated to validate transactions.Related: Ethereum upgrades: A Beginner’s Guide to Eth2In this scenario, it will be harder for front runners to find profitable trades in a blockchain teeming with transactions, but not impossible. Many frontrunners out there are technically proficient, so you can’t just rule out the possibility. DEXs can cover design points like quick matching, decentralized match engine and periodic auction matching to minimize the odds of front-running.

Čítaj viac
What is crypto lending and how does it work?

What is crypto lending and how does it work?

Uverejnil používateľ | apr 12, 2022 |

The COVID-19 pandemic had a deleterious effect on the returns from the conventional instruments of investments such as stocks, gold and real estate, driving investors in hordes toward crypto. Individuals and institutionalized investors alike have tried their luck in the industry that has rolled out decent returns even during the worldwide economic slump that horrified many investors.Despite an intense debate raging about cryptocurrency offering a great window to grow wealth with alacrity and its extremely volatile ways, there is no denying the fact the industry has grown rapidly over the last two years. It is still innovating, trying different ideas and breaking more barriers in the process. One of these areas is crypto lending.What is crypto lending?Crypto lending is an ingenious instrument to obtain the cash you need quickly, as it allows you to utilize your crypto holdings as security to get secure loans. If you are wondering how do I borrow crypto, collateralized crypto lending is a viable solution. It allows borrowers to use their crypto assets as collateral to get a fiat or stablecoin loan.This enables you to get the money without having to sell your coins, use the cash to fulfill your objectives and then repay to get back the hold on your assets. Crypto loans allow you to use digital assets you hold to generate dividends by lending out part or whole of the holdings.Crypto lending platforms play a key role in dispensing such loans. Generally, you can borrow up to 50% of the value of your digital assets, though some platforms might allow you to borrow even more. Crypto loans generally don’t have a concept like EMI and borrowers may repay when they can before the fixed term ends. As for the interest rates, it is approximately 4% on Celsius Network on popular non-stablecoin cryptocurrencies.As for the question, is lending crypto profitable, it depends on a string of factors. If you default on your debts, you end up losing your assets. Inconsistencies integral to crypto assets have led to more takers to stablecoin lending. On Celcius Network and Nexo, stablecoin lenders can earn 8%, while on Compound Finance — a decentralized crypto lending platform — the lending annual percentage rate (APR) for Dai (DAI) and USD Coin (USDC) is 12% and 9%, respectively.Related: What is yield farming in DeFi?How does stablecoin lending work?When it comes to interest rates, peer-to-peer (P2P) lending and borrowing models are closely influenced by the supply and demand scenario. A high volume of loans coupled with a low supply from lenders means high returns for lenders. However, if the demand for crypto loans is low and the supply from lenders is high, the interest rate for borrowers will be low to attract the borrowers. If you are considering why do stablecoins have high-interest rates, this section may come across as quite informative. The principle idea of supply and demand leads to stablecoin lending, providing annual returns in double digits. Stablecoins are still a budding industry, being just 2-3% of the total crypto market capitalization. On the lending platforms, a substantial amount of the lending supply comes from stablecoins. Many buy these coins only to lend them on these platforms, but it’s alarmingly low compared to the supply of the top cryptocurrencies. Take the case of Compound Finance, where Ether (ETH) has 50% more gross supply than DAI and USDC combined.Contrast it with the demand and you will find the figures are staggering. On Compound Finance, the demand for DAI trumps that of ETH by nearly 40 times. Large institutional traders and cryptocurrency payment processors are behind the huge demand for DAI. Institutional traders include the hedge funds and market makers clubbing on crypto loans for speculation purposes.How does crypto lending work?Just like a securities-based loan, a cryptocurrency-backed loan collateralizes digital currency. Basically, it resembles a mortgage loan. You give hold of your crypto assets to get the loan and repay it over a predetermined time. These types of loans can be obtained through a crypto lending platform or a crypto exchange. Though you still retain ownership of the collateralized crypto, you forego the right to make transactions using digital coins.Crypto loans come across as a viable option because of several advantages such as low interest rates, choice of loan currency, lack of credit check, fast funding and the ability to earn passive income on your crypto that is otherwise lying idle. Moreover, you can lend your own digital coins and receive a high APY (more than 10%) on several crypto platforms.All crypto lending transactions have two distinct parties: the borrower and the lender. It is for the borrower to deposit crypto assets as collateral to secure the loan from the lender. The arrangement works to mutual advantage, as the borrower receives an immediate loan in return for their crypto assets while the lenders earn interest on the amount released as a loan. If the borrower defaults, they dispose of the underlying crypto assets to realize their money.Steps of crypto lending explained Whether you are looking for crypto lending on Binance, Coinbase or any other platform, the basics remain the same. Borrowers have to go through the following steps.For the lenders, the steps to lending are provided: Things to know before getting into crypto lending and borrowingCrypto lending is a replication of collateralized loans in fiat. You need to be careful of a few factors when dealing in cryptocurrencies.Related: ‘Big Time’ Margin Call Can Skyrocket Bitcoin Price in Mid-Term: AnalystShould you lend crypto?You may be eager to know if crypto lending is safe. Before you go active on a crypto platform as a lender, make sure you are well-versed with the specifics. When you move your crypto to any platform for lending, they hold access to the keys to the cryptocurrency — not you. You just have the bond issued by the smart contract. Check the auditing standards of the smart contract, the history of the project and its team can help you guide your decisions.If you begin lending with your eyes closed, do not be surprised if your crypto disappears. QuadrigaCX, for instance, is nothing less than a horror story. A Netflix documentary discussed the suspicious death of Gerald Cotton, the founder of QuadrigaCX, the Canadian cryptocurrency exchange and how he misappropriated customer funds. About $190 million worth of digital assets kept on the exchange were lost.To sum up, you need to do your due diligence before taking a call on the platform you’d be using for lending and borrowing. Regardless of the lending platform, knowing your game and limitations is extremely important when it comes to successful innings. A mistake might prove costly, so better put in the best of your exploratory skills to work.

Čítaj viac

Získaj BONUS 8 € v Bitcoinoch

nakup bitcoin z karty

Registrácia Binance

Burza Binance

Aktuálne kurzy