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No one would argue with you if you said the cryptocurrency market is exciting. That’s exciting. It is also a volatile place to invest your hard earned money. If you want to play crypto but avoid extreme volatility, that doesn’t mean you have to stay out of the cryptocurrency game completely. I mean, the future could very well be in digital currencies, and with so much choice in the market, this risky investment could do you a bundle.
That said, if your stomach can’t handle the ups and downs of cryptocurrency trading through places like Coinbase (NASDAQ: COIN), there is another way to make money without selling the digital currency you are. already own. Of course, you can invest in non-fungible tokens in the crypto space in the hope that your investment will increase in value, and this game might be something you want to add to your wallet. But what if you could earn interest on your Bitcoin (TSX: QBTC) or Ethereum (NYSE: ETH) and keep ownership? Companies like Hodlnaut allow you to earn interest on your cryptocurrencies.
What is Hodlnaut?
Maybe you’ve heard of BlockFi, where you can keep digital currency in a crypto wallet to trade or earn interest. If so, you should know about Hodlnaut, a similar but smaller startup that provides the same services as the crypto lending giant.
A couple of entrepreneurs in Singapore launched the new fintech company to give investors in the cryptocurrency community a way to make money on their investments without trading.
How the Hodlnaut system works
When you deposit your cryptocurrency in Hodlnaut, it lends the coins to companies that otherwise could not get a crypto loan. For this privilege, it charges businesses and other loan recipients an interest rate like any bank would on a loan. Then, Hodlnaut sends you part of this interest in payment to enable it to lend your position.
The risks of investing
The only risk you take in investing your cryptocurrencies in Hodlnaut is the volatility of the crypto itself. When the company lends your position, there is no risk of losing the amount you have loaned, called principal in regulated banking. For example, if you allow Hodlnaut to lend your crypto for interest and the borrower defaults on the loan, Hodlnaut will buy back the position and return it to you at their expense. Of course, Hodlnaut wants to prevent this from happening, so he has contracts in place to prevent such an event. But in any case, Hodlnaut takes the hit, so there is no financial risk on your part beyond the market valuation of the cryptocurrency you hold.
Getting the most from your cryptocurrency
When you invest in cryptocurrencies, you know it’s going to be a wild ride, and that may be part of the reason why you entered the digital currency market. But since you’re still taking a risk of buying and selling crypto, why not make the most of your position by earning interest on the coins while you hold them (or, in the crypto world, “Hodl”)? Earning interest on your cryptocurrency is a smart way to earn extra cash without the risk for you, and Hodlnaut helps make it happen.
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