Everyone has a plan or at least they think they do. What's Your Plan for Crypto Income?
Origin of Annual Income
When I think about some of the traditional schools of thought when it comes to annual income it really comes down to what many of us have been taught in school or learning from family or peers when it comes to business practices.
For example, most people would say something to the effect that if you can receive at least 7% annual return of minimal risk that you are moving in the right direction. Now I'm not totally agreeing with that, but am just saying that has been one "school of thought" for quite sometime.
Today in crypto communities I think it would be more appropriate to say that many are expecting at least 7x returns instead of just a percentage. So I have a question.
Where did 7% come from? Who actually made that a benchmark for some?
I have looked in many places and it is completely interesting what comes up. 7% actually appears in both increases and decreases quite frequently. Coincidence or is this something else?
One source I know personally is in the federal government contracting process. There is a place where an estimated profit can be projected in a bid or proposal. The norm is typically 7%.
As odd as all of this seems the intent of this article is to talk about generating income. In essence, making your assets create income for you.
There Are Other Options
Just to be clear we are talking about crypto or digital assets and thinking about how we create income from those assets. Several options exist such as;
staking
defi
lending
which all create different streams. For this piece we are only looking at the 3rd item on the list which is lending. I have found 2 sources that seem reputable and have been in operation for a short while with decent returns.
NEXO.io
The first platform I came across through a recommendation of a peer is Nexo.io.
On first look at Nexo you may think that it is simply a place for you to receive a line of credit for your crypto. Yes, that is an option, but there is another feature as well.
The option to earn up to 12% annually on your digital assets is interesting enough for the more risk adverse.
Basically the whole process works like a traditional savings account that you would have at a banking institution. You deposit your crypto to one of the wallets associated with your account and from there it earns interest which pays out daily.
There are no penalties for withdrawals and you are free to come and go as you wish. You do relinquish your control as the assets are moved from your personal wallet to a wallet that is under Nexo control. They attempt to mitigate that concern with each account being insured.
Also it should be pointed out that most assets have a base interest rate of 5-8%. To receive above those interest rates you would then need to agree to receive your interest payments in Nexo tokens. Also there is a sliding scale of how many Nexo tokens you hold as a percentage of your overall portfolio.
Basically if you have near 30% of your portfolio in Nexo tokens you gain another point or two in interest overall.
Everyone has a different strategy and for me having the 5-8% is a solid foundation to work from.
Celsius
The second and equally valuable platform which operates very similarly to Nexo is Celsius Network, which I have not used personally but have heard rave reviews from colleagues and peers.
In very much the same way as other platforms, Celsius Network loans out value to others and pays you an interest rate. Also with an in-kind interest payment you see a lower interest rate than if you were to accept the native token of the platform CEL. Some examples of the rates are as follows;
We can see from the CEL v. In-Kind regard differences that similar to Nexo the rates have a delta of around 2% in general. It should be noted that the list above is not exhaustive and that numerous other digital assets are available through Celsius Network.
Celsius Network is only available as an app on a mobile device although the desk top web page is informative overall.
My 2 Satoshi's
It sure seems like there is much price action that is expected from now through 2021. In that time I can't even imagine the numbers of transactions, swaps and transfers that will take place. In fact, it will be stunning to read through the data as the dust finally settles from the next bull run.
In the mean time, there will be needs for short, medium and long term parking of capital for new investment, HODL, or even looking for that next round of income.
I recall during my formative years hearing the "adults" in the room talking about retirement and savings, etc. Part of the discussions were; for every million dollars at 7% you will have 70,000 income each year before taxes.
There's no doubt that many more will enter the 7 figure club over the next year and part of the decision making process that will need to take place is how to receive income from their windfall.
Also, how does a person take advantage of the maximizer effect as well, but we will save that for another article.
