In 2020, several new strategies have emerged in the digital asset market for rapidly increasing capital. Not everyone managed to make money on them, but for someone they brought huge profits.
This year, several ways have appeared in the cryptocurrency industry at once to quickly, but with an extremely high risk, increase capital. The most popular of these is “profitable farming” in the field of decentralized finance (DeFi). It works as follows: the user transfers digital assets to a special platform and opens a deposit in them. According to it, the platform pays a percentage in its own tokens, thus traders “harvest”.
A distinctive feature of this strategy is the deposit rates. Their value can exceed thousands of percent per annum, such returns are often offered by new DeFi platforms. For example, users of the Sushi site in the first days after its launch could receive more than 2000% per annum for a deposit in Ethereum. One trader who took advantage of this reported that he earned $ 160 per minute, or about $ 240 thousand per day.
"Profitable farming" with extremely high interest rates on deposits is one of the most risky ways to make money on cryptocurrency. There is a possibility that the user will transfer funds to a fraudulent platform or its code will not pass the check for critical vulnerabilities. In both cases, the trader can lose all funds.
Another risk was experienced by a user of the Kimbap platform. He bought her tokens for $ 5000 and used them to open a deposit, the yield on which was more than 1000% per annum. However, the trader did not take into account the peculiarity of the formation of rates in "profitable farming". The amount of profitability depends on the price of the token in which the “farmers” receive payments on deposits. Since users sell harvested coins, their price drops, and, as a rule, rather rapidly. This happened with the Kimbap token, during the day its rate collapsed more than 100 times, because of which the trader who bought the asset for $ 5000 lost almost all the invested funds.
Investments in ICO
The DeFi space has revived the era of ICOs (initial token offerings) and this is another opportunity to raise capital. The tokens of decentralized services, as a rule, immediately after listing show an increase of hundreds of percent. The most recent example is the Polkastater Platform Coin (POLS). Her token sale took place on September 29 at the rate of $ 0.05. Immediately after being added to the popular decentralized platform Uniswap, the price of the asset soared to $ 0.9, now it has dropped to $ 0.5. The traders participating in the initial sale were able to receive hundreds of percent on a single trade.
Participation in ICO DeFi projects looks like an easy way to increase capital at times. But there are many risks and nuances. For example, it is extremely difficult to buy coins during a token sale. Often, startups sell their tokens to a very narrow circle of traders, and their choice is based on the “who is faster” principle.
The selection is carried out as follows: the project publishes a link to a Google form on social networks at a predetermined time. It requires you to answer several questions about the project, indicate your full name, email address, Ethereum wallet and other information. Then go through the captcha and confirm the registration. The first, for example, 200 people who manage to do this, get the right to purchase tokens before their initial listing on the exchange.
Users in this token sale format are essentially invited to take a risk and send funds to a startup, trusting only their account in the Telegram channel and information on the website. Moreover, scammers act in a similar way, which sometimes cannot be distinguished from real projects. Therefore, when participating in ICOs, especially in the field of DeFi, it is safer to choose only those projects that have a finished product and support in the community, for example, from the media.
Fraudsters create another problem of participation in the token sale. Often, the initial placement of coins occurs on decentralized exchanges, such as Uniswap, where anyone can add their cryptocurrency. For example, on the day of the Polkastarter token sale, at least 14 fake POLS tokens appeared on Uniswap. In one of them, users invested more than $ 30 thousand, while it costs $ 20-30 to issue their own coin and add it to Uniswap.
Earnings on DeFi tokens
Another extremely risky but potentially profitable way to make money is investing in DeFi tokens. In July-August, most of them showed an increase of hundreds and even thousands of percent. This is best demonstrated by the YFI coin. It was released on July 18 and traded at $ 32 on the first day. By September, the price of the asset had risen more than 100,000%, at the moment reaching $ 44,000, although now it has dropped to $ 20,000.
Many traders who hunt for DeFi tokens in the hope that they will repeat the growth of YFI try to buy coins as soon as possible after their release. The services astrotools.io and dextools.io help with this. They allow you to track the addition of assets to Uniswap in real time. Perhaps, using them, it will be possible to acquire a cryptocurrency that will show the dynamics of the Hotdog DeFi token. It appeared on September 2 and during the day it went up by 120,000%, from $ 5 to $ 6200. And yet this is an extremely risky strategy, since a few minutes after such an increase, Hotdog dropped in price to almost zero. And there is also a risk of losing funds by investing them in an altcoin issued by fraudsters.
