Making my cryptocurrencies work for me – Homework for Crypto Academy lesson from @fendit.
Thank you @fendit for your very interesting lesson about how we can make our cryptocurrencies work for us, and about the different levels of risk involved as one gets involved in different investments on Binance.
Source: Two vectors from Pixabay, a background from Pixabay, and own work!
My thoughts about risk aversion
In crypto, we all want to get rich as quickly as possible. As a result, we often take great risks, hoping that it will help us get a lamborghini or reach the moon in less than a year. But, when it comes to riska version, I consider myself to be a quite conservative person. I want to get rich as well, but not at any cost.
I follow a few principles when it comes to investing. I never invest in futures, nor do I work with shorts and longs. It is way too risky, and even though it might bring a higher profit, there is also a higher risk involved, and I am not willing to take that.
At Binance, there are a couple of investment possibilities that I find to be truly amazing.
The Launchpool and the Launchpad projects are safe places to „staking” your funds
@Fendit described the Launchpool option in his lesson, but not entirely correctly (the way I see it). I consider this to be one of the securest ways of investing, because you only use your BNB and BUSD, but with no risk involved. In addition, you can unstake your funds and receive them back to your account at any time. You do not lock up your funds, meaning that you can stop staking at any time. In other words, your funds are not at danger, and you will never „loose” anything using this method. Instead, you will always receive a staking reward in the launchpad project at hand.
Launchpad projects are awesome for interest, and can be redeemed whenever.
Currently, the FLM token is rewarded to those staking in the Launchpad on Binance. I have used this myself, and I am daily withdrawing my FLM rewards, and I have also removed BUSD funds and added some now and then.
Way better than no interest at all, but there are for sure more rewarding solutions as well.
Binance Vault is a safe investment as well!
The Binance Vault is very similar tot he Launchpad. In fact, the BNB tokens that you stake in your Binance Vault, will automatically participate in the Launchpad projects. As a result, you will receive a selection of tokens available through the Launchpad, and you will also receive an interest on your BNB tokens. All in all, a very good solution, and without risk at all, as there is no danger of losing BNB tokens, but you will still earn a nice interest through all the tokens you receive as your interest.
The flexible and fixed savings
I have tested this as well personally, and I truly enjoy them. The flexible savings are very nice, because you just add your funds and you will receive a low interest (but still better than nothing), and you can at any time remove funds and use them for other purposes. It doesn’t come with the same high interest as the Binance Vault and the Launchpad projects, but it is still a nice option.
The fixed savings is something I find useful for tokens I am holding long term. In other words, it is great for tokens I have no intention of selling, and that I just keep in my wallet. Icon is an example of such a token, and I always stake my ICX tokens with fixed savings on Binance. In that way, I grow my stake of ICX tokens, and there is no risk involved. Of course, I am unable to withdraw them if I suddenly want to sell them. As a result, this is an option I normally use only for tokens that I hold long term and that I have no intention of selling.
The difference between fixed, flexible, high risk products, and launch pools!
I have already discussed this quite thoroughly above, but I will sum it up right here.
You add your funds to flexible savings, and just by having them there you will earn a low daily interest. There is no risk of losing funds, and you can withdraw your funds whenever you want to.
You can add funds to fixed savings. They will then be locked up for a set time against a set interest rate. There are no risks at all involved, but you are unable to access your funds until the fixed saving time has ended.
You can stake BNB, BUSD, and often a third token against a daily interest in form of a new token that will be added to Binance or that has just been added to Binance. There is no risk involved, and you will not lose any funds. Often you will see interest rates between 4% and 10% on such projects.
Sometimes Binance is arranging IEOs, Initial Exchange Offerings. To partake, you need to keep BNB tokens on the platform. Based on your average BNB holding for a set period of time, you will be able to partake in the Launchpool (buying the new token). After the period in which Binance checks your BNB holdings, there is a 4 hour period in which you can join the Launchpool with your BNB tokens. Due to extreme interest, you will normally only be accepted with 0,5% of the requested amount. As a result, if you dedicate 100 BNB to the launchpool, you will most likely be returned 99,5 BNB tokens, and only 0,5% will be deducted from your holdings and turned into tokens for the new project.
However, based on my experience, there is an extreme interest, and we have often seen tokens being sold immediately upon Binance listing at a price 10x-20x higher than the IEO price.
You can also have the chance of doing DeFi staking on Binance. This is a safe investment as well, as you can stake your tokens and receive a fixed interest in the same currency after a set amount of time. You are unable to withdraw your staked amount during this period. This is very similar tot he earlier mentioned fixed savings.
High risk investments on Binance
There are different options for high risk investments on Binance. It is possible to become a liquidity provider (like you can on Uniswap, PancakeSwap, and other similar exchanges). This has the possibility of giving you nice gains, but there is also a big risk when you become a liquidity provider. The most famous expression here is impermanent loss. If one of the tokens you add to such a liquidity pair „goes west”, then you might end up owning a lot of „junk” tokens, and few of the really valuable one. In the end, you might have received gains and interest due to your participation in the liquidity pool, but still, you are at loss due to the price decrease of one of the tokens you invested in the pool.
You also have the Dual Investment option which should be considered a high risk investment. It might not be that high risk in the end, but if the market should collapse, then you might see a big decrease in the value of your investment by the time the dual investment time comes to an end.
This option is a bit more technical and harder to understand for laypeople, and not at all as „straightforward” as a fixed saving of a flexible saving, or as the straightforward DeFi staking or Launchpad projects.
An example of fixed savings on Binance
Enough theory… let me just show an easy example of a fixed savings project on Binance. Here I will add my ICX tokens to a fixed savings project valid for 60 days. I am promised an interest of approximately 13%, something that should be considered a very good interest rate.
Setting up a fixed savings deal on Binance.
It is very easy to make your crypto work for you at the Binance platform. Most of the options are without any risk at all, while some contain some more risk.
But, in the end – it is easy to work with Binance and it is an excellent platform for those who want to make their cryptocurrencies work instead of them!