Does Crypto Grow In A Wallet?
If you’ve been using an exchange like Coinbase, Kraken or Binance, you might be wondering if withdrawing your crypto to a non-custodial wallet makes it grow. While crypto doesn't grow by itself in any wallet, self-custodying crypto with a wallet like Fire opens doors to various strategies that can get you a return. It means doing more than simply storing your assets, but putting them to work to earn a return for you.
In this article, we’ll briefly introduce a few ways to earn from your crypto and link to other resources we created to help you explore those strategies. To get a basic overview over growing your crypto, we’ve created a comprehensive guide on earning crypto returns.
Disclaimer: This article is for informational purposes only and does not constitute investment advice.
1. Staking: Growing your crypto by securing the network
Staking means locking up a portion of your crypto in a smart contract to support operations like transaction validation, security and development in a blockchain network. This might sound complicated, but in practice it just means locking up your crypto.
In return, you earn rewards. This process can help your crypto grow in your wallet over time. One of the evolving trends in staking is liquid staking, where you receive a token representation of your staked assets, something called a Liquid Staking Derivative (LSD. This makes your staked assets more liquid, so you can participate in other yield-generating activities.
2. DeFi lending protocols: Grow your crypto with decentralized loans
DeFi, or decentralized finance, has revolutionized the way we think about banking and finance. Lending platforms like Aave and Compound allow you to lend out cryptocurrencies to earn interest.
You only have to add your tokens to the platform and you’ll earn a share of the platform’s payments.
3. Providing liquidity
Another strategy to grow your crypto involves becoming a liquidity provider. By supplying crypto to liquidity pools in decentralized exchanges (DEXs), you can earn fees from the trading activity that happens in decentralized exchanges. We wrote a comprehensive guide on the AMM Uniswap, which explains how to do this.
The Importance of Withdrawing from Exchanges and Selecting the Right Wallet
In this article, we’ve explored a few ways you can make your crypto grow. If you’re still looking for the right wallet to withdraw your crypto to from an exchange, we’ve written an article that explains the basics of hot wallets and cold wallets as well as a.
Cryptocurrency is more than just a digital asset; it’s an ecosystem of financial opportunities. While your crypto doesn’t naturally grow in your wallet, the right strategies and platforms can help you maximize your holdings. Whether through staking, lending on DeFi platforms, or providing liquidity, there's potential for any committed individual to see their crypto grow in their wallet. By making informed decisions and taking calculated risks, the world of cryptocurrency can become a fruitful venture for many.
If you’re exploring Ethereum, check out Fire!
We explored the misconception that cryptocurrency grows automatically in a wallet, emphasizing that strategic methods can yield returns. It outlines three key approaches:
- Staking: This involves locking a portion of crypto in a smart contract to support blockchain functions like transaction validation. Users earn rewards over time, and trends like liquid staking derivatives enhance liquidity.
- DeFi Lending Protocols: Platforms like Aave and Compound enable users to lend cryptocurrencies and earn interest, revolutionizing traditional banking concepts.
- Providing Liquidity: By contributing crypto to liquidity pools in decentralized exchanges, users can earn fees from trading activities.
If you want to get started today, you can do so by signing up for the Fire Wallet!