Since ancient times, the greatest visionaries knew that an excellent method to have passive income was making money "working". This idea is still valid today, even if, following the last economic crisis of 2009, interest rates they have been lowered in order to boost the economy.
With the advent of cryptocurrencies and decentralized finance, other types of passive returns have been added: cryptocurrency staking and lending.
Staking
This passive entry methodology is based on the Blockchian type of consent; this consensus method is called PoS Proof-of-Stake.
In contrast to PoS, there is the PoW Proof-of-Work, where in order to validate the blocks, a proof of work is required, therefore very efficient and dedicated processors (Chip Asic) are required that perform extremely complicated calculations. The solution to the problem is what is called proof of work.
For Staking, on the other hand, complicated calculations and extreme quantities of electricity are not required: the investor does nothing but block their coins to get rewards.
In practice, it demonstrates that it has "bet" coins to validate blocks.
For both systems, the rewards for "miners" are the fees that are charged to execute transactions.
In order to participate in staking, depending on the blockchain, there are 2 possibilities:
Rely on platforms that allow you to simplify operations, or register directly on the site and connect everything to your wallet.
As it is easy to deduce, the difference between one solution and the other is substantial: in the first case the cryptocurrencies are not in their wallet while in the second case they do not move from the wallet. In addition to a centralization of something that has been created to create something basically decentralized.
Cryptographic Loan
Crypto loan and staking essentially produce passive income but in different forms.
As mentioned above, the Staking rewards consist of a percentage of the fees that are paid for each transaction.
With regard to the cryptographic loan, the rewards are the interest paid by the borrowers according to the amount of the ceiling made available.
Cryptographic lending can be done using real cryptocurrencies or stablecoins; clearly the annuities are also different according to the risk.
A cryptographic loan has the convenience of obtaining it in a very short time, if not instantaneous: in traditional finance, it is a chimera!
The possibility of having a cryptocurrency loan very quickly derives from the fact that the capital guarantee must be used first: in practice it is obtained through the collateralization of the loan.
In other words, the loan that is granted is already covered by a guarantee, so if the borrower does not fall within the borrowed capital, the guarantee is already available and can be requested.
To access the cryptographic loan, there are 2 possibilities as for Staking: prepared platforms or smart-contracts that allow the implementation of the loan.
Same thing, also in this case: if you rely on a platform that manages the activation of the smart-contract, you enter the CeFi, so we have centralization.
Crypto Loan Security
With regard to the security of both passive income options, we are subject to the usual possibilities of hacking by third parties.
Obviously, the possibilities of hacking are greater when we rely on a platform and do not use our wallet as a support point for all operations.
Personal advice is to activate in any case a 2-factor verification in order to have the maximum protection of the private key.
Returns
Both the two investments are subject to the volatility of cryptocurrencies, so although we can have a high percentage return, with a price decline it is not impossible that we will also gnaw a part of the invested capital.
As regards the lending of cryptocurrencies, an additional variable is added: the collateralization of the ceiling.
Let's say that, in my point of view, you take more risks with crypto loan than staking.
I would like to clarify that this post has no investment purpose but is a simple analysis of the differences between the two types of investment.
It reaffirms in every way that the investment budget must be equal to the amount we have the possibility of losing.
