After bitcoin, Ethereum is the second largest and most promising cryptocurrency in the market. Many people perceive it as the next big thing, especially because its value has been appreciating faster than bitcoin in the last few months. The underlying blockchain for Ethereum facilitates smart contracts and can handle crypto assets anonymously, making it easier to earn interest on Ethereum in different ways.
There are two ways to earn interest on Ethereum: staking and loans. You can earn more from your Ethereum by opening a savings account with a crypto lending platform. These platforms use your funds to supply loans to retail and institutional investors and offer you a 5-6% interest rate.
The other alternative is to stake your Ethereum on the Ethereum blockchain and earn between 4-10% interest annually. In what is known as proof of stake consensus, Ethereum staking is used to upgrade the Eth 2.0 beacon chain. The upgrade is expected to lower the cost of transacting on the Ethereum blockchain and significantly boost the number of transactions on the blockchain. However, you won’t be able to withdraw your ether tokens if you stake them until the upgrade is complete.
Here is how to earn more from your Ethereum.
Open a crypto account.
The first step is to open a crypto account that allows you to earn interest on your Ethereum tokens. The best part is that the platform pays you the interest in Ethereum; therefore, your initial investment will increase if the Ethereum token’s value rises. In contrast, your initial investment and earned interest drop in value if Ethereum depreciates.
Some lending platforms offering competitive interest-bearing savings allow you to take out loans in crypto. However, you have to use your crypto holdings as collateral, a great option for investors who want loans without selling the cryptos.
Another alternative is to create an account with a crypto exchange to stake Ethereum. It is a secure and straightforward way to earn interest on the token.
Examine interest rates
Interest rates vary depending on the supply and demand of the crypto. Therefore you should monitor the interest you earn on Ethereum to know whether it is worth it. Note that there is no guarantee that you can earn a 5-7% interest rate annually in the long term.
If you stake your Ethereum tokens, the interest you earn fluctuates according to the supply of ether tokens staked on the blockchain. But the average is 5-10% interest annually.
Add Ethereum tokens to your account.
You can buy Ethereum tokens on a crypto exchange and then fund your account to earn interest. If the platform allows it, you can also use wire transfer to purchase tokens on the platform if you already don’t own some.
After funding your account with Ethereum tokens, you can now earn interest. Your returns depend on whether you use a crypto lending platform or stake your Ethereum tokens. If using a lending platform, ensure you monitor fluctuation rates and compare different platforms to get the highest rate possible.
Many investors switch between platforms to make the most out of their ether tokens. If you stake your tokens on the eth 2.0 blockchain, you will not access your funds even when the interests decrease for up to a year minimum.