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Top 10 Alternatives to Binance Liquid Swap

source-logo  coincodex.com 04 August 2021 17:03, UTC

Thanks to the immense volatility of the cryptocurrency market, many cryptocurrency investors don’t want to take the risk of actively trading the cryptocurrency they own. Practically every crypto investor is familiar with the “HODL” concept, and for good reason. Most people will lose money when day trading, and holding cryptocurrencies for the long term has so far been a very successful strategy, at least when it comes to well-established coins like Bitcoin and Ethereum.

Even investors who choose to HODL instead of trading now have multiple ways to grow their cryptocurrency stash that are less risky than trading. These opportunities are offered by both centralized platforms as well as DeFi protocols, and typically involve providing liquidity to a liquidity pool to earn trading fees, or lending cryptocurrency to earn interest. 

Of course, you should keep in mind that every opportunity to make a profit also comes with risk. For example, when you’re providing liquidity to a liquidity pool, you take on the risk of impermanent loss. When you’re lending your cryptocurrency, you have to trust that a centralized exchange will be able to keep your funds safe, or that the smart contracts used by your DeFi protocol of choice will not be exploited. 

Platforms similar to Binance Liquid Swap provide an opportunity to grow your crypto holdings

One of the more popular ways for users to grow their cryptocurrency holdings is Binance Liquid Swap (BLS), a product offered by the Binance cryptocurrency exchange. BLS is based on the Automatic Market Maker (AMM) concept that was first introduced by Uniswap, a DeFi protocol.

AMMs like Binance Liquid Swap allow traders to instantly access a pool’s liquidity and swap between two different crypto assets in exchange for a fee. For example, you could use an ETH/USDC liquidity pool to swap some of your ETH for USDC or vice-versa – from a trader’s perspective, the experience is very similar to using a standard trading pair on a cryptocurrency exchange. This is made possible by liquidity providers, who are the ones that are actually providing the cryptocurrency you’re swapping to. 

Binance Liquid Swap and other AMMs allow users to provide liquidity to a liquidity pool, and earn a portion of the transaction fees generated by the pool. In the case of Binance Liquid Swap, you can also earn some additional rewards on top of the transaction fees.

BLS is a strong option for users that want to be liquidity providers, but might not be comfortable doing so directly on the blockchain. BLS can also be used as a complement to your DeFi positions as a way to diversify your cryptocurrency holdings and investments. On some pairs, the annualized yields can go well above 10%, but you have to remember that impermanent loss can eat into your profits, especially on more volatile trading pairs. 

The 10 best Binance Liquid Swap alternatives for passively earning crypto

While BLS certainly has its strengths, we will now also be going through some of the most popular alternatives to give you a sense of what options for passively earning crypto are available on the market today. We’ll be covering a diverse set of options that spans both centralized and decentralized platforms, as well as different ways of earning (liquidity provision, margin lending, decentralized lending, staking etc.).

1. BlockFi

BlockFi is a centralized platform that primarily facilitates cryptocurrency lending, but also offers some other options like cryptocurrency trading and a credit card that pays out rewards in Bitcoin. The BlockFi Interest Account product lets users deposit their cryptocurrency and earn interest on their holdings.

The amount of interest you can earn will depend on the cryptocurrency you’re depositing, as well as market conditions – if there is more demand for borrowing cryptocurrencies, interest rates will be higher, and vice versa. Your APY (annual percentage yield) will also depend on how much cryptocurrency you’re depositing. If you’re depositing a large amount, you rates will be lower.

BlockFi’s Interest Account product supports both standard crypto assets like Bitcoin, Ethereum and Chainlink, but you can also deposit stablecoins like Tether USD, USD Coin and Binance USD. Typically, you can earn a higher APY when depositing stablecoins.

Just for some context, let’s run through some of the rates that BlockFi is offering at the time of writing. The platform is offering up to 4.5% APY on Litecoin, up to 4% APY on Bitcoin and Ethereum, and up to 3% APY on LINK. For stablecoins, the APY goes up to 7.5% at the top end. To learn about the up-to-date rates BlockFi is offering, you can check out their website.

BlockFi summary

  • Centralized platform that offers cryptocurrency interest accounts
  • Supports standard cryptocurrencies and stablecoins
  • Offers a credit card with Bitcoin rewards
  • Users can borrow fiat currency by supplying cryptocurrency as collateral
  • KYC is required

Create BlockFi Account

2. KuCoin Crypto Lending

KuCoin Crypto Lending is a platform developed by KuCoin, a centralized cryptocurrency exchange that’s especially popular among altcoin traders and investors. Through this product, you can earn interest on your cryptocurrency holdings by lending them out to users who are participating in margin trading. In margin trading, traders use borrowed funds in order to enter larger positions, amplifying both the potential profits and losses.

One of the biggest strengths of crypto lending on KuCoin is that the platform supports a wide variety of crypto assets, ranging from top cryptocurrencies to smaller altcoins like BitTorrent Token and NEM. Like with almost all other lending scenarios in the cryptocurrency market, the highest interest can be earned when lending out stablecoins like Tether USD. 

On KuCoin Crypto Lending, you can choose between different offers from traders that are looking to borrow crypto. These offers will vary by the amount of cryptocurrency to be borrowed, the daily interest rate, and the duration of the loan (between 7 and 28 days). This gives you quite a lot of flexibility to choose an offer that’s best suited to your needs.

KuCoin Crypto Lending summary

  • Centralized exchange that lets users lend funds to margin traders
  • Supports a large variety of cryptocurrencies for lending
  • Users can choose between different lending options, providing more flexibility
  • KYC is currently not required

Create KuCoin Account

3. Compound

Compound is one of the leading decentralized finance (DeFi) protocols for lending and borrowing cryptocurrencies. Compound is deployed in the form of smart contracts on the decentralized Ethereum blockchain. If you want to lend your cryptocurrency on Compound and earn interest, you will have to supply your coins to the protocol and you will receive corresponding cTokens in return. In Compound, interest accrues with every Ethereum block.

When you’re ready to collect your profits, you can redeem the cTokens back at any time for the same type of cryptocurrency that you supplied. For example, cETH tokens are redeemable for ETH.

Compound is a very solid option for users that prefer to use decentralized platforms, but do keep in mind that interest rates will typically be lower than what you’ll be able to get on centralized exchanges.  

Compound summary

  • Decentralized protocol for lending and borrowing crypto
  • Supports both standard tokens and stablecoins
  • Users can withdraw their funds at any time
  • Rates tend to be lower than on centralized lending platforms
  • KYC is currently not required

Lend Crypto on Compound

4. Uniswap

As we’ve mentioned earlier, Uniswap introduced the popular automated market maker model to the world. For the average user, Uniswap provides a similar experience to a normal cryptocurrency exchange – you select a trading pair, and trade one of the pair’s cryptocurrencies to buy the pair’s other cryptocurrency. 

Under the hood, Uniswap works through liquidity pools that users supply liquidity to, and earn a portion of the trading fees collected by the pool. This is how you can use Uniswap to passively grow your cryptocurrency holdings. 

When you supply liquidity to a Uniswap pool, you will receive liquidity tokens, which reflect your contribution to the pool. These liquidity tokens belong to you and you can use them on the Ethereum blockchain any way you please. When you want to get back the tokens you supplied to the liquidity pool (and transaction fee rewards), you have to burn these liquidity tokens. The primary risk from providing liquidity on Uniswap is impermanent loss, and this risk is higher on more volatile trading pairs.

Uniswap supports a truly massive selection of tokens – any Ethereum-based ERC20 token can be added to the protocol. Accordingly, the returns you can expect from providing liquidity on Uniswap vary greatly from token to token. 

Occasionally, Uniswap will run liquidity mining programs where users can also earn UNI tokens in exchange for providing liquidity.

Uniswap summary

  • Extremely popular decentralized exchange / automated market maker
  • Enables swaps between different Ethereum-based tokens
  • Users can provide liquidity to a pool and earn a portion of the collected fees
  • Has its own governance token called UNI
  • No KYC required

Provide Liquidity on Uniswap

5. YouHodler

YouHodler is a centralized platform that specializes in cryptocurrency lending that supports a large variety of different cryptocurrencies. At the time of writing, you can earn an APY as high as 12% if you deposit stablecoins to YouHodler’s “Earn Interest” product, but you should check out their website to learn about the rates they are offering right now.

The YouHodler platform offers a nice variety of lending products, which will be appropriate for different users, depending on their risk appetite. For example, YouHodler’s “Multi HODL” product is designed for users that want to profit from market volatility, but it is riskier than YouHodler’s standard lending product. 

Like many other centralized crypto lending platforms, you can also borrow fiat currency on YouHodler by supplying your cryptocurrencies as collateral. YouHodler offers a lot of flexibility here by allowing users to adjust many of a loan’s key parameters according to their needs.

YouHodler summary

  • Centralized cryptocurrency lending platform with a large variety of supported coins
  • Provides different types of lending products for users with different risk appetites
  • Users can also borrow fiat currency by using their crypto as collateral
  • KYC is required

Create YouHodler Account

6. CoinLoan

CoinLoan is a centralized cryptocurrency lending platform that offers cryptocurrency interest accounts as well as cryptocurrency trading and other services. Their interest account feature supports a nice variety of crypto assets, and ranges from large market cap cryptocurrencies to popular stablecoins. At the time of writing, CoinLoan offers an APY of up to 7.2% on Bitcoin and Ethereum and up to 12.3% on stablecoins, but you should check out their website to get up-to-date rates.

CoinLoan also has their own token called CLT that provides benefits to holders when using the platform. For example, CLT holders can earn a higher interest rate on CoinLoan’s cryptocurrency interest accounts, and they can also benefit from lower fees when borrowing assets. 

CoinLoan summary

  • Centralized cryptocurrency lending and borrowing platform
  • Interest account gives users the ability to earn interest on cryptocurrencies and stablecoins
  • Offers cryptocurrency-backed borrowing
  • Has its own token called CLT
  • KYC is required

Create CoinLoan Account

7. Kraken Staking

Up to here, we’ve only covered cryptocurrency lending platforms or automated market makers that let liquidity providers earn rewards. Now, let’s switch it up a bit by featuring Kraken, a cryptocurrency exchange that lets users earn rewards by staking their cryptocurrencies.

Bitcoin is secured through mining, in a process called Proof-of-Work (PoW). However, there’s also another very popular way of securing cryptocurrency networks called Proof-of-Stake (PoS). 

Here’s a very basic overview – in PoS, users that validate transactions stake their coins to “pledge” that they will be acting in the best interests of the network and only confirming legitimate transactions. If they are found to be violating the rules, their stake is slashed and they lose a portion or the entirety of their staked coins. Users who are playing by the rules are compensated with staking rewards – for example, DOT stakers will earn some extra DOT.

Typically, you can stake cryptocurrencies with your wallet, but this process can be quite complicated, depending on the cryptocurrency. Kraken makes the process much simpler by staking coins on behalf of their customers, and distributing the rewards back to the users (minus a fee). 
Kraken supports staking for many of the most popular PoS cryptocurrencies, such as Polkadot, Cardano, Ethereum 2.0, Solana, Tezos and more. If you hold these cryptocurrencies and have a Kraken account, staking on Kraken can be a very straightforward way to earn some extra coins.

Kraken Staking summary

  • Centralized cryptocurrency exchange with a staking feature
  • Supports staking for the majority of the most popular PoS cryptocurrencies
  • Stakers receive rewards twice a week
  • One of the most well-established exchanges in the cryptocurrency market
  • KYC is required

Create Kraken Account

8. Nexo

Nexo is one of the most popular cryptocurrency lending platforms out there, and their NEXO token has a market capitalization of almost $1 billion at the time of writing. 

The Nexo platform supports more than 40 different fiat currencies, and also lets users borrow cash or stablecoins by supplying their cryptocurrency as collateral. At the time of writing, Nexo allows up to 8% interest on cryptocurrencies and up to 12% interest on stablecoins, and the interest is paid out on a daily basis. You can earn interest on around 25 different crypto assets on Nexo, with stablecoins providing the best yields. 

Nexo also has their own card on the Mastercard network that allows users to spend their cryptocurrency balances on Nexo wherever Mastercard is accepted. The card also offers up to 2% cashback on all transactions, which can be paid out in either NEXO or BTC.

The NEXO token provides benefits to holders – for example, users who choose to earn interest in the form of NEXO tokens can get 2% in additional interest.

Nexo summary

  • One of the most popular centralized cryptocurrency lending platforms
  • Users can earn interest on a variety of cryptocurrencies and stablecoins
  • Has their own Mastercard card with crypto cashback rewards
  • Users can borrow cash or stablecoins by using their crypto as collateral
  • KYC is required

Create Nexo Account

9. Celsius

Celsius is another centralized cryptocurrency lending platform that has reached a high degree of popularity in the crypto community. Celsius users can earn interest on stablecoins, with rates set at around 11% at the time of writing. Those who choose to earn interest in the form of CEL tokens can get higher payouts.

Users should keep in mind that large deposits of BTC and ETH will earn a smaller APY than small deposits. For Bitcoin, the rate drops if the deposit is larger than 1 BTC, while this limit is set at 100 ETH for Ethereum.

Celsius also offer cryptocurrency loans, where users can take out cash or stablecoin loans against their cryptocurrency holdings. These loans offer quite a bit of flexibility, as users can choose between different interest rate levels and LTV ratios, as well as different loan durations.

CEL holders get access to a discount of up to 25% on the loans they take from Celsius. The tokens can also be held at Celsius to earn weekly interest. Users can reach different reward tiers, depending on how much of their Celsius portfolio consists of CEL tokens.

Celsius summary

  • Centralized crypto lending platform that supports cryptocurrencies and stablecoins
  • CEL holders can get access to higher APYs
  • Offers crypto-backed loans with flexible parameters
  • KYC is required

Create Celsius Account

10. PancakeSwap

PancakeSwap is a fork of Uniswap that’s deployed on the Binance Smart Chain blockchain platform. The basic functionality of PancakeSwap is practically identical to Uniswap – the platform can either be used to swap between different tokens, or to supply liquidity to earn a profit from transaction fees. 

However, PancakeSwap has also added some unique features in an effort to stand out from the competition. For example, PancakeSwap’s “Syrup Pools” allow users to stake CAKE tokens and either earn additional CAKE or other tokens. 

The PancakeSwap platform also sports a host of other features, including Initial Farm Offerings (IFOs), NFT collectibles, yield farming and more. 

PancakeSwap summary

  • Decentralized exchange / automated market maker built on Binance Smart Chain
  • Users can earn crypto by providing liquidity 
  • Has its own token called CAKE
  • Offers different products like Syrup Pools, IFOs, yield farming and NFT collectibles
  • No KYC required

Provide Liquidity on PancakeSwap

Why is it important to have alternatives to Binance Liquid Swap?

Even though Binance Liquid Swap is a great product, it pays off to know the other alternatives that are available to you. By not keeping all your eggs in one basket and spreading out your funds across different platforms, you can lower your risk in the event that something goes very wrong – for example, an exchange could get hacked, or someone can find a fatal exploit in a set of smart contracts. By using different platforms you can also get access to more types of cryptocurrencies, and optimize your strategy to achieve the highest returns.

We hope this article helped you learn about the different ways you can passively earn cryptocurrency without trading.

coincodex.com