Can You Earn Interest on Ethereum?


Over the past 2 years, the world’s economy has been greatly affected by an economic crisis that has caused interest rates earned from bank deposits to drop greatly. Access to credit has also proven to be a challenge for many because lending institutions do not want to take the risk. As a result, investors are now switching to taking out crypto loans in coins like Ethereum (ETH). This. on the other hand, presents an opportunity for crypto enthusiasts to earn interest in ETH.

Ethereum currently is the second-largest digital currency in terms of market capitalization making it an ideal option for use as collateral for crypto-backed loans. This also means the number of crypto investors who can earn interest on Ethereum is also high. Its smart contracts option on the Ethereum blockchain makes it one of the most preferred cryptocurrencies in the world.

Can You Earn Interest on Ethereum?

Earning interest in crypto such as Ethereum is relatively a new idea but it is picking up pace at a rapid speed. This is because the interest rates earned are higher than most banks’ interest rates and the risk is lower. In this post, we’ll answer the question: Can you earn interest on Ethereum?

Ways on how you can earn interest in Ethereum

1. Creating crypto savings accounts

Opening a crypto savings account is one of the most common and the best way in which you can earn interest with Ethereum. Once you create an account and deposit your ETH tokens, your account immediately starts accruing interest. Your Ethereum can earn you interest of up to 5.5% per annum plus compound interest. However, you need to choose a reputable platform with the best rates before you open an account.

YouHodler is one of the most reputable platforms where you can earn interest on ETH as well as other crypto and get crypto loans as well. Its interest rate of 5.5% per year which is compounded makes it the best place to earn interest on Ethereum. With YouHodler, you can access your coins whenever you want.

2. Staking

Staking is also another popular option you can use to earn ETH interest. You can stake your Ethereum coins on the ETH beacon chain where you can earn interest ranging from 4% to 10% per annum. The staking on Ethereum is done to help upgrade the Ethereum blockchain network with an aim of lowering the transaction cost and enhancing transaction throughput as well.

Unlike in YouHodler where you can access your funds, once you stake your Ethereum coins you can no longer access them until the upgrade is completed. If you feel you may need to access your funds in the near future, it is better that you deposit them in a crypto savings account on a flexible basis.

Can you earn compound interest on Ethereum?

When you open a crypto savings account, you have the option of depositing your funds on fixed or flexible terms. When you select the flexible basis, you can withdraw your funds any time and the interest is paid weekly, although it is slightly lower. The interest rate on the fixed term is higher and if the period selected is more than one year, you earn compound interest on your funds. Because cryptocurrencies are very volatile, many investors prefer a flexible basis.

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