With the increasing inflation rates, the global interest rates remain low to earn investors decent returns on their investments. Consequently, many people are looking for an alternative way to grow their wealth. Cryptocurrencies are becoming increasingly popular investment assets with huge gains in recent years on different coins. Another way of building your investment is earning interest on the crypto assets you own. 

Generally, the annualized interest rates for crypto investments exceed 4% for Bitcoin and 8% for stablecoins. Some altcoins, like HI, may offer rates as high as 20% APY. Your initial investment can increase even more substantially when compounded over a few years. 

Different ways to earn interest on cryptocurrencies

You can earn interest on your digital currency assets through staking, which is available on specific coins, or lending platforms. Simply put, staking involves locking up digital tokens to be used in validating transactions on a proof-of-stake blockchain network. By supporting the security, integrity, and continuity of a blockchain network, validators (stakers) earn more of the cryptocurrency as a reward. 

Lending platforms is another way of warning interest in your cryptocurrency. Such platforms use the investors’ money to lend to other users looking to borrow funds. The interest gained from the borrowers is distributed to the investors (lenders).   

1. Staking

The first way to earn interest in your cryptocurrency is through staking. Simply put, staking involves locking up your portion of your funds to help maintain a specific network. Blockchain networks that support staking use Proof-of-Stake (PoS) consensus mechanism and include Ethereum 2.0, Cardano, Polkadot, Avalanche, and Solana. 

As a reward for helping in maintaining the network, the investors receive interest. The annual interest rate is determined as the annual percentage rate (APR) for simple interest and annual percentage yield (APY) for compounded interest. The interest rate varies greatly between coins and ranges between 0.05% and 100% annually.

Some tokens may offer a very high-interest rate but present higher risks. Therefore, you should do some research before deciding which coin to stake.

The disadvantage with staking through an exchange is that it involves giving up control of your funds to the exchange. This may put your funds at risk in case anything happens to the exchange. Exchanges may be hacked or go out of business. In addition, most exchanges charge a fee for offering you the staking service.

Ensure you consider the fees that the wallets changes. Some may not even charge staking fees, hence perfect, especially for beginners. However, you should also remember that in most cases, wallets support a small variety of staking coins. 

2. DeFi and Yield Farming

Another way to earn interest on your crypto asset is to invest in DeFi and yield farming projects. DeFi is short for decentralized finance, which are financial services that are controlled by a distributed network of independent computers rather than a centralized authority. DeFi uses pre-defined rules defined in computer codes (smart contracts). 

Many DeFi projects allow users to lock up their holdings to earn interest. The locked-up funds can be put to different use, including staking, lending, supplying liquidity to decentralized exchanges (DEX), and farming.  

3. Cryptocurrency Savings Account 

Finally, we come to the easiest option, which is a cryptocurrency savings account. A Crypto savings account is provided by centralized companies, which agree to pay users interest for holding their tokens on their platforms. The company can use the deposit in various ways, including lending it out to generate interest. 

Savings accounts may vary in the interest they offer; hence, it is important to research to find the best account with the highest return. For example, hi.com offers up to 12% APY on stablecoins.

The main drawback with a crypto savings account is that you have to give up control over your funds to a third party. However, with these accounts, you do not need to worry about the lockup period. Additionally, a crypto savings account is a good alternative for coins that do not support stakings, such as Bitcoin and Ethereum 1.0. 

Again, you need to do research on different coins and the interest you can earn on them as well as the fees you will be charged. Remember that not all platforms that offer high interest are safe. Sometimes, high-interest rates may signal increased risk. It may be a less reputable company or a new, untested coin. 

How to earn interest on cryptocurrency?

Every investor hopes for the best interest rates. Therefore, an investor will first compare the interest rates of different cryptocurrencies and their platforms. You can see the interest rates you will earn on different cryptocurrencies directly on their websites on the respective platforms. 

The interest for most crypto savings accounts is mainly floating rates. Such interests may vary continuously based on the demand and supply for crypto loans. This qualifies the fact that investments in cryptocurrency are very volatile. 

You can follow the following simple steps to open an interesting account and start earning your interest. 

Step 1. Open a Crypto Account

Opening a crypto interest is the first step in ensuring you earn interest in crypto. Whichever platform you choose, you will be required to register an account with that platform. For example, to begin earning interest with the Hi.com platform, you need to sign up with your email address and a password of choice. You will also need to choose your preferred cryptocurrency.  

Step 2. Verify Identity

At this stage, you are required to verify your identity. Depending on the platform you have chosen to register in, the different verification processes will be required. Financial companies are required to implement Know-Your-Customer (KYC) in cooperation with the Anti-money laundering policy and the effort to combat the financing of terrorism. You will supply personal details such as name, nationality, residential address, and date of birth at the basic level. And finally, you may be required to upload a copy of the government identity card.

Step 3. Deposit Funds

After verifying your account, you can now make deposits of the number of funds you wish. Depending on the platform, you can deposit fiat currency or digital assets. Additionally, some platforms require a minimum deposit.  

Step 4. Earning Interest

Once the deposit is completed, you will expect your funds to begin earning you interest depending on the interest terms provided by the platform you invested in. Factors such as the kind of interest, the period of interest, and other payment terms apply.

Popular cryptocurrencies are particularly attracting many investors due to their high liquidity. Such coins may attract less interest yet present low risks. Cryptocurrencies such as BTC, ETH, LTC, and BNB, may be attractive to beginners even though they attract lower interest rates. 

Although the interest rates fluctuate based on the supply and demand in the market, most larger coins have relatively stable annual percentage rates (APR). For example, Bitcoin interest rates vary from 4% to 8%.  

Where to earn interest on crypto?

Many cryptocurrency lending and exchange platforms offer crypto lending services that can earn you a decent crypto income. However, all these platforms may differ in different factors, including interest rates, availability in some locations, minimum lending amount, and the supported coins for lending. With all these factors to note, it can be difficult deciding which platform to use. Additionally, there is the issue of trust – you may not know which site to trust or if the interest rates are misleading. Here are some top accounts offering the best interest rates.

1. Hi.com- Best Crypto Interest Account 

Hi.com has one of the highest interest rates compared to all other interest accounts on crypto. It offers up to 40% APY on Hi dollar (HI). Bitcoin and Ethereum attract 6% and 8% APY, respectively, while Dogecoin has an APY range of between 0.5% and 5%. Hi.com also offers savings account for stablecoins, which attracts 11% APY. The platform is accessible through mobile, PC, and web apps.

Besides the decent interest rates, Hi.com also offer other services that can help investors looking to deposit their funds for interest. It has an exchange platform that allows users to buy tokens using fiat currency. You can also quickly cash out your interest in fiat through the exchange.