To be profitable in crypto you must first offset the inflation

You might think that it is easy to get in crypto, just buy some tokens, set them aside, hodl on them and wait for the price to wait. But while that might take quite a long time to happen you might be tempted to just sell and use more actively the money. In the same time if you have the patience to wait for your assets to prove themselves and that to be reflected in the price, when selling you might need to make a compromise on the yields. And that sometimes happens with blockchains and cryptocurrencies that have inflation programmed in their lifecycle. So in such cases - like the Hive or WAX blockchains, we'd better beat the inflation before thinking to anything else.

How can we beat inflation in crypto?

First through earning more tokens based on the available mechanics specific to each blockchain in this regards. On Hive blockchain that can be from content creation and engagement, while on WAX blockchain that can be through NFTs and gameplaying. But besides this, there are some other ways that we can use in order to have a positive balance on crypto assets that incur also yearly inflation. So let's dive into those.

Staking and earning rewards

On the Hive blockchain for example we can stake Hive into Hive Power and this way increase the voting power through which we can curate and earn more curation rewards which in the end will help to offset the inflation rate. The wonderful thing here is that users who stake Hive into Hive Power not only gain voting power but also receive a share of the powering up as passive APR which hovers around 3%.

On the WAX blockchain you can stake WAX into CPU and NET resources which are used to support the network and get around 8% for that. The inflation on WAX is variable, but up to a maximum of 5%, so only from this action you can offset the effects of the inflation.

Yield farming and liquidity providers

On both Hive and WAX blockchain, any user can extend the revenue streams by yield farming as liquidity providers on different exchanges on these platforms. Whether it is on Hive-Engine, TribalDex or LeoDex on the Hive blockchain or Alcor on WAX, these revenue streams are helping to combat inflation and get you more bucks for your assets. It accompanies some risk, but if chosen the right LP pair with valuable tokens, you should in general be on the positive curve of earnings.

On chain stablecoins

Stablecoins help with a steady revenue stream and when are providing more APR% than the main blockchain asset inflation, they provide a safe net for positive yields. On Hive blockchain there is HBD which offers an impressive 20% APR which also compounds and is a real hidden gem. On the WAX blockchain I don't know about any stables and if I am thinking about it they should really add one as it will help the ecosystem. They can even inspire from Hive and who knows, maybe we'll have such an alternative also on WAX.

Supporting burning mechanisms

Both Hive and WAX have different burning mechanisms and some of them are also individually or community lead burning initiatives. Supporting them one way or the other will help lower the inflation and in this way get you closer to positive returns at the end of the year.

NFTs and free2play games

Both blockchain have strong free2play games, so tapping into those will provide rewards that will help growing the assets in the portfolio. Simply you need to be ahead of the game and this way you will end up earning more than the inflation is thrown at you. This is a more active approach, but nevertheless is one that can make a huge difference.

What I can say in the end is that by leveraging these strategies — staking, yield farming, burning mechanisms, stablecoins, actively earn through content creation, playing games, gathering NFTs etc — you can effectively mitigate the impact of inflation and potentially exponentially increase the returns. Each method provides a way to earn additional income or reduce the supply of tokens, thereby counteracting the natural inflationary pressures present in many blockchain ecosystems. Also, knowing the tokenomics of any blockchain you want to invest into it is imperative as I realized few days ago when I put everything on paper and did some math and the returns weren't looking so good. Knowledge is power and that dictates your strategy with a cryptocurrency or another.

Posted Using InLeo Alpha