No one would argue with you if you said the cryptocurrency market is exciting. It is exciting. It’s also a volatile place to invest your hard-earned money. If you want to play in crypto but avoid extreme volatility, it doesn’t mean you have to stay out of the cryptocurrency game altogether. I mean, the future may very well be in digital currencies, and with so many to choose from in the market, this risky investment could make you a bundle.
That said, if your stomach can’t handle the ups and downs of trading cryptocurrencies through places like Coinbase (NASDAQ: COIN), there’s another way you can earn money without selling the digital currency you already own. Sure, you could invest in non-fungible tokens in the crypto space in hopes that your investment will go up in value, and that play could be something you want to add to your portfolio. But what if you could earn interest on your Bitcoin (XTSE: QBTC.U) or Ethereum (NYSE: ETH) and still retain ownership? Companies like Hodlnaut make earning interest on your cryptocurrencies possible.
What Is Hodlnaut?
Maybe you’ve heard of BlockFi, where you can hold digital currency in a crypto wallet for trading or earning interest. If so, you need to know about Hodlnaut, a similar but smaller startup company that provides the same services as the crypto lending giant.
A couple of entrepreneurs in Singapore started the new fintech company to give investors in the cryptocurrency community a means to make money on their investments without trading.
How the Hodlnaut System Works
When you deposit your cryptocurrency into Hodlnaut, it loans out the coins to corporations that might not otherwise be able to get a crypto loan. For this privilege, it charges the companies and other loan recipients an interest rate just like any bank would for a loan. Then Hodlnaut passes some of that interest to you as payment for allowing it to loan out your position.
The Risks of Investing
The only risk you take by investing your cryptocurrencies in Hodlnaut is the volatility of the crypto itself. When the company loans out your position, there’s no risk to you of losing the amount you’ve lent, known as your principal in the regulated banking world. For instance, if you allow Hodlnaut to loan out your crypto for interest, and the borrower defaults on the loan, Hodlnaut will rebuy the position and return it to you at their cost. Of course, Hodlnaut wants to prevent that from happening, so it has contracts in place to prevent such an occurrence. But in any event, Hodlnaut takes the hit, so there’s no financial risk on your part beyond the market valuation of the cryptocurrency you hold.
Making the Most out of your Cryptocurrency
When you invest in cryptocurrencies, you know it’s going to be a wild ride, and maybe that’s part of the reason you jumped into the digital currency market. But since you’re taking a risk buying and selling crypto anyway, why not make the most out of your position by earning interest on the coins while you hold (or, in the crypto world, “hodl”) them? Earning interest on your cryptocurrency is a smart way to earn extra cash at no risk to you, and Hodlnaut helps to make that happen.
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