Past Crypto Investment Strategies Vs. Crypto in 2022

As someone who has gone from a curious crypto user to a member of a team of crypto developers and investors building the next great liquid staking protocol, Geode Finance, I have watched the cryptocurrency space evolve tremendously. One particular thing I’ve noticed is that passive income has suddenly become one of the most hotly discussed topics for crypto in 2022. It all began in late 2020 with the popularization of DeFi and really exploded in early 2021.

Previously, people always wanted to know about “hot alt-coin” tips. The next shitcoin pump & dump scheme. Those new projects you “have to get into ASAP” or you’d miss out on the next big thing. The next moon coin that made you a millionaire overnight. Or, perhaps it was technical analysis strategies – how to truly understand price action, so one may best predict it as the market ebbs and flows in the future.

However, as crypto has grown and matured immensely in recent years, I’ve witnessed an ever-growing number of users who’ve shifted their portfolio management strategies away from these trading-based concepts. Instead, they employ something more akin to the dividend investing seen in traditional finance. That is to say, when it comes to crypto in 2022, more investors make passive income generation their chief goal. But how does one go about doing this? What are the risks? And ultimately, what are the best ways to earn income passively with crypto in 2022?

"Superfly" of Geode Finance discusses investing with crypto in 2022
“Superfly” of Geode Finance

Earning Passive Income in the Decentralized Finance Marketplace

Although the topic may appear quite complex, at a surface level it’s actually fairly straightforward. Generally speaking, there are two ways to earn passive income in crypto: yield farming, and staking. For the purposes of this article, I will be focusing on the latter, but I will explain the differences between these two methods so that readers can better understand their choices.

What is Crypto Yield Farming?

Yield farming is essentially the practice of lending out (or “locking up”) your crypto and receiving regular rewards (or interest payments) for doing so. This can be done with various lending/borrowing protocols, like AAVE for example, or with a decentralized exchange, like Uniswap. The reason I am not focusing on yield farming is due to the fact that it carries a significant level of risk, including but not limited to impermanent loss, exposure to smart contract exploits, and more. Engaging in yield farming may potentially offset the gains of any passive income accrued. In fact, you stand to lose your entire investment.

What is Cryptocurrency Staking?

So then, what is staking, and why is it better? First off, staking also involves locking up your tokens. However, it’s for an entirely different purpose – validation of the transactions occurring on that particular blockchain. These validators are regularly rewarded for their participation, thus creating a stream of passive income for stakers. This means that not only are you gaining income, but also helping to ensure the functionality of these decentralized systems. Furthermore, staking on validator nodes allows you to earn passive income while also speculating on the value of token assets.

When it comes to crypto in 2022, we’re moving away from the old, outdated models set during the inception of decentralized blockchains. Proof-of-stake chains, like Avalanche Network, offer better scalability and are less harmful to the environment than conventional proof-of-work chains, like Bitcoin. Important advantages, all made possible by crypto users staking their tokens.

So, if staking is such a win-win situation, why isn’t everyone doing it? In most cases, it’s due to the relatively high barrier to entry. Staking for validator rewards all on your own requires a good deal of technical knowledge and a fairly large amount of tokens. In fact, many chains require beginning investments of $100,000 plus to begin operating a network validator. As you can imagine, this excludes the vast majority of investors. However, there are answers to these problems as well!

What is a “Staking as a Service” Provider? 

Staking as a Service, or SaaS for short, provides a way for all crypto users to participate in staking, regardless of how many tokens they own, or how much technical knowledge they possess. Essentially, a single entity (or perhaps a DAO) takes on the task of setting up and running the required infrastructure, then stakes a pool of the deposited user funds. This way, a user may gain passive income simply by staking the number of tokens desired with a SaaS provider, effectively leap-frogging the barrier to entry normally encountered with staking.

On the other hand, there’s one step past traditional staking that investors can utilize. An option where the user can combine the best of all worlds! It’s called ‘liquid staking’.

What is Liquid Staking?

With liquid staking, users can stake funds as they would with SaaS providers. However, instead of giving up their tokens during the time they’re staked, they receive another, yield-bearing token. This token serves as a redemption ticket of sorts, almost like a government savings bond. An IOU with additional promised ROI built into it. Furthermore, unlike a savings bond, users may swap back for their original tokens when they wish. Meanwhile, it’s a yield-bearing asset for as long as they choose to hold it. Since users retain the staked, yield-bearing form of their tokens, it enables perhaps the most powerful aspect of liquid staking – DeFi composability. But what the heck does that mean?

Well, not only can you simply hold those yield-bearing tokens, you can utilize them within the decentralized financial ecosystem as a whole. After all, when we’re talking DeFi and crypto in 2022, liquid staking tokens will be accepted in the same types of ways that their non-yield bearing, native token counterparts are. This means that not only can an investor gain income passively from staking, but then take those yield-bearing tokens received and put them to work in a yield farm, thereby increasing that passive income (and in some cases increasing it significantly).

Now, as I said before, it’s important to remember that engaging in advanced investment opportunities like yield farming or providing liquidity to paired pools comes with much greater risk than simply staking or holding native assets in your wallet. But to be frank, employing every tactic possible is a great way to increase earnings with crypto in 2022.

Reinventing the Concept of Liquid Staking Crypto in 2022

Making liquid staking easy to understand, use, and available for everyone is our mission at Geode Finance. And we’re doing things differently. We’re building our staking solution to be white-label from the ground up, with a B2B focus. In other words, any other project out there can employ our technology, empowering and expanding their treasuries by employing the yield-bearing forms of the tokens they already hold. All the benefits of their own staking solution, without changing governance they’ve already got in place.

We believe it will be a real game-changer within the DeFi space as more protocols see the light so to speak, and look to employ some form of staking in their projects. We also believe that proof of stake is the way forward for blockchain. That’s why we’re currently launching on the Avalanche Network in partnership with renowned autocompounding protocol Yield Yak and validator experts at Eden Network. If all goes as planned, you’ll see Geode expand to other networks in the near future.

In closing, earning passive income with crypto in 2022 is easier and better now than it has ever been before. However, it still requires a fair amount of education and risk assessment. The future appears bright, as liquid staking is just now entering the public crypto consciousness. In this author’s opinion, when it comes to crypto in 2022, we’re sure to see continued innovation in this field.

Learn More About Geode Finance

Interested in learning more about Geode Finance, the multi-chain liquid staking universe? You can find out all about Geode’s vision to increase DeFi composability and increase safety in the world of cryptocurrency by visiting some of the helpful sources discussed below:

For the most up-to-date information and breakdowns of complex topics, we recommend visiting Geode‘s Medium blog. They offer protocol news, partnership announcements, answer Frequently Asked Questions, and even provide a detailed glossary of cryptocurrency & DeFi terms to help new users understand the world of decentralized finance.

Additionally, if you’re interested in learning more about the ways that Geode plans to impact the world of crypto in 2022, we recommend getting involved in their online communities. You can follow Geode‘s Twitter profile for general announcements & engagement. However, if you really want to be part of the action, Geode‘s Discord server is the place to be. Furthermore, we recommend you visit Geode’s YouTube channel to watch helpful videos, gain valuable tips, and follow extensive walkthroughs to help you better understand the platform. You can also keep up with Geode‘s other social media channels including their Facebook, Instagram, and TikTok pages.

Finally, if you’d like to learn more about our guest author, please pay Superfly a visit on his Twitter profile.