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In the world of cryptocurrencies, two approaches stand out: holding (keeping assets for the long term) and yield farming (generating returns through staking or lending). Both are valid strategies, but with very different objectives and risks.
What does it involve? Buying a token at a low price, holding onto it, and selling it when its value increases.
Main advantage: If the project takes off, the profits can be exponential.
Risk: If the market falls, the value of your investment plummets.
How does it work? You lock your cryptos in DeFi protocols to earn interest (APY).
Key benefit: You earn returns even if the token price remains stable.
Cons: If the token loses value, your profits may not offset the depreciation.
1️⃣ The token rises sharply (bullish rally)
Hold: Maximum profit.
Yield farming: You earn, but less than with holding.
2️⃣ The token rises slowly
Hold: Profitable, but not spectacular.
Yield farming: Small, steady gainss.
3️⃣ The token remains sideways (unchanged)
Hold: You neither win nor lose.
Yield farming: Stable returns (the best option).
4️⃣ The token slowly drops
Hold: Moderate losses.
Yield farming: Possible equilibrium (rewards offset the decline).
5️⃣ The token collapses (sharp decline)
Hold: Severe losses.
Yield farming: You still lose, but less.
Holding is ideal if you believe in a long-term project and can tolerate high volatility.
Yield farming is more conservative: it generates passive income and reduces risk in sideways or bearish markets.
Many investors diversify:
A hold portfolio for bullish bets.
A yield farming portfolio for steady cash flow.
Furthermore, maintaining liquidity allows you to take advantage of opportunities during downturns.
What do you prefer? Holding, farming, or a mix? Leave your answer in the comments!
2 comments
You want to explore the world of "DeFi" and you have no idea why you should start with it, because many times it is believed that having all the "Hold" is better than investing it or putting it at risk. Well, they are partly right, but, on the other hand not, since placing your money in Yield Farming, also has the ability to earn much more than just having it stagnant waiting for a token to go up, instead, if you have it working, you can earn commissions while waiting for it to revalue. Anyway, in the next post I show you which is better and how the solution can be in combining both scenarios, besides, this is the last paragraph post you can collect as a NFT, since we have live the new model where each post is a token, so you can collect it and keep it as my last piece written with the old model. https://paragraph.com/@lenonmc21/holding-vs-yield-farming-which-is-the-best-strategy-in-crypto?referrer=0x2e1b03a953CE8F6294443F02Ad9a87a6dac94958
Exploring strategies in the crypto world, @lenonmc21 breaks down two popular approaches: holding for potential long-term gains versus yield farming for consistent income. Holding bets on project success, while yield farming reduces risk amidst market fluctuations. Which strategy do you prefer?