Ever since the release of Bitcoin all the way back in 2009 by Satoshi Nakamoto, history has shown that it has been on a consistent rise. With the recent investments made by some of the world’s biggest corporations into Bitcoin, it has been sky-rocketed to the moon in terms of value. However, we can also notice that it had its pitfalls as well, and that’s the risk with just about any type of cryptocurrency.
Derivatives and Yields
Discussing derivatives, they offer financial security with a value that is reliant upon or derived from an underlying asset or a group of assets – think of it as a benchmark. The derivative is a contact between two or more parties, and the derivative derives its price from the fluctuations in the underlying asset.
Yield is the net profit investors get in their initial investment. It is defined as the income return on investment, and it is typically expressed through an annual percentage based on the investment’s cost, its current value, and its face value. Any investment opportunity has an expected annual yield as well as a risk profile associated with it. If you take the time to consider the annual yields in banks, you will find that they are less than satisfactory, to say the least.
However, over the past few years, one of the fastest-growing areas within the cryptocurrency market has been a new asset called cryptocurrency derivatives. There are three main types of cryptocurrency derivatives, including crypto futures, crypto options, and perpetual crypto swaps. You can read our in depth Introduction to derivatives and their value proposition in financial markets but for the sake of our current topic, here is a quick summary of all three:
- Crypto futures are standard agreements and they are compulsory, and the trade has to take place on the given date.
- Crypto options are similar to futures except that they are optional to complete.
- Crypto perpetual swaps are similar to crypto futures, except that the contracts have to be finalized in BTC instead of USD.
Drixx Earn Platform specializes in CeDeFi, a combination of CeFi (centralized Finance) and DeFi (Decentralized Finance).
Switching to Crypto
Since the start of 2023, banks have been engaging in quantitative easing in a bid to stave off recession. As a result, this has pushed interest rates on traditional currencies to a near-zero or a negative.
As such, a lot of parties have been making a push to investing and earning interest in cryptocurrencies.
There are four common ways through which you can earn interest in crypto and leverage the expected derivatives trading boom.
1. Lending Cryptocurrency – 20% APY
Discussing the risks of lending cryptocurrencies, this is a high-risk method as smart contracts can have bugs, be hacked and operational errors can occur due to human error.
2. Hedging Roll Yield on a Centralized Exchange – 20% APY
This is a classic strategy in traditional finance; however, it requires quite a bit of understanding in terms of the derivatives market.
3. Perpetual Funding – 40-50% APY
This strategy will require close ongoing involvement as the contracts’ settlements can occur daily, in fact, every 8 hours. As a result of this, you will be required to make frequent adjustments so you can actually profit out of it. It is typically used with leverage, that can range up to x100, making it one of the most risky strategies that requires proper risk management.
4. Liquidity Mining and Yield Farming – 400% APY or more in tokens
Now, keep in mind that some coins can be worthless, as just about anyone can create a smart contract that rewards you with a bit more coins on a daily interval. Your eyes probably lit up when you saw that % mark, however in the real world, the projects that are truly worth the investment will provide between 5% to 10% APY. Then you need to consider the price risk, which is the actual value in stablecoin, that is so volatile that it can even drop to be worth virtually nothing. You also have smart contract risks, as new projects could be unaudited and risk getting hacked due to bugs or very specific use cases that had not been taken into account.
At this point, you might be scratching your head due to this level of complexity and risk, and are probably wondering what the best strategy is. This is where Drixx comes to the big picture.
Drixx: The Ultimate Crypto Exchange
Drixx is an integrated crypto finance provider that helps its clients access liquidity, earning yield, and managing risk throughout crypto assets with the eventual goal of optimizing long-term value through the delivery of investment flexibility and maximization returns.
Through Drixx Earn, you can earn up to 18.6 APY, and the interest accrues daily and is paid out every 24 hours. When we look at the conservative side of things, the APY still ranges from 8% to 10%. The accrued yield can be withdrawn at any time, or even reinvested to compound the interest. To do this, it utilizes advanced yielding technologies that leverage CeFi and DeFi platforms. The system can take advantage of untapped opportunities in the derivatives markets that are too complex or risky for a single person to do, even if he is a seasoned professional trader or investor
When it comes to the security aspect, the main method of risk management is through a limitation in the amount of collateral that Drixx places in external exchanges. No more than 20% is placed at any external exchange or platform.
Another thing to note is the fact that, regardless of the financial market conditions, your funds are secured at all times by a Drixx asset-backed portfolio of overcollateralized loans. At all times, you retain instant access to your capital while earning interest, and you can withdraw funds at any time without losing the accrued interest. There are no tiers or levels in terms of getting the APYs, and you are never forced to hold a certain number of tokens to be eligible for higher return rates.
All of that being said, Drixx offers high yield returns, favorable fees, a professional UI, plenty of promotions such as welcome bonuses and multi-tier referral programs, strong custody security where the withdrawals are done manually through multi-sig cold wallets.