How to Earn Interest on Chainlink?
Chainlink solves a critical problem for smart contracts. It feeds real-world information to them via decentralized oracle networks in real-time. Its token known as LINK has been making headlines in the crypto world for good reasons and has become one of the most well-known cryptocurrencies in recent times.
Crypto users holding on Chainlink have seen real value as Chainlink's prices have grown considerably. If you are holding onto Chainlink tokens, you should keep them in an interest account to earn interest on Chainlink. It is far better than just hodling Chainlink. By earning interest on LINK, you will see your profits grow. Follow the steps below to start earning interest up to 6.2% APY on Chainlink:
- Signup for an Interest Account
The first step to begin earning interest is signing up for an interest account. For that, you will have to visit the website of an interest account provider and go to their signup page. Provide your legal name and email address and click on the submit button.
- Verify Your Account
After you sign up for an interest account, you will receive an email containing a verification link. Click on the link to verify your email address. Now, you have to activate your account, and for that, you will have to go through a KYC process.
You will have to submit your personal details along with a government-issued identity card to complete the KYC process. Another thing that you will need is a photograph of yourself holding the identity card. Some platforms also require that you hold a paper with the date and name of the platform written on it while clicking a photograph.
- Deposit Your Chainlink
Once your KYC is approved, you will have to deposit Chainlink to your interest account. To deposit Chainlink, go to the page which shows a list of available deposit options. You will see Chainlink or LINK mentioned in the list. Click on it to receive a unique wallet address.
Copy the wallet address and paste it on the withdrawal page of the wallet from where you will be withdrawing Chainlink to your interest account. Enter the amount of Chainlink that you wish to withdraw and click on the "Withdraw button." You will receive Chainlink in your interest account soon.
- Start Earning Interest
Once you have received Chainlink in your interest account, you don't have to do anything. The interest accruals will begin automatically. Keep your Chainlink funds in your interest account and see them grow.
Why Earn Interest on Chainlink?
Earning interest up to 6.2% APY on Chainlink is far better than keeping it idle in a wallet or an exchange. By keeping your Chainlink holdings in an interest account, you are maximizing the potential profits. The interest you earn on Chainlink is more than what any bank in the western world offer on fiat currencies.
- Easy and Straightforward Process
It is easy to begin earning interest on Chainlink. All you need to do is signup for a Chainlink interest account, complete the KYC process, and deposit Chainlink to your interest account. That's all you need to do. The interest accruals will begin automatically once your interest account receives Chainlink.
- Low Risk
If we compare other financial instruments offering similarly high returns, we will find that earning interest on Chainlink is a less risky option. Crypto lending platforms share a part of their income with their interest account holders in the form of interest.
The majority share of their income comes from lending cryptocurrencies and fiat currencies. They manage the risk by making over-collateralization mandatory to borrow from them.
- Passive Income
You can earn up to 6.2% APY on your Chainlink if you deposit it in an interest account. The interest income will add to your wealth. Passive income is the best form of income, and earning interest on Chainlink is one of the best passive income opportunities available in the crypto space.
Where can I earn Interest on Chainlink?
Chainlink is a popular cryptocurrency, but it is not yet available on many crypto lending platforms for earning interest on it. Among the platforms that offer interest on Chainlink, YouHolder and Celsius Network lead the tally.
With YouHodler, you can earn 6.2% interest on Chainlink. But to become eligible for earning interest on Chainlink, you will have to deposit a minimum of $500 worth of Chainlink. YouHodler also offers its Multi Hodl and Turbocharge features to earn even more on your Chainlink deposit. You are also free to access your funds in your YouHodler account round the clock.
Celsius Network offers interest up to 5.66% APY on Chainlink. But to become eligible for the highest interest rates on Celsius Network, you must agree to receive interest payout in CEL tokens, the native token of Celsius Network. If you are from the United States, you cannot receive a payout in CEL tokens. Thus, you are not eligible to earn the highest rates offered by Celsius on Chainlink.
The interest rate available to the residents of the United States is equal to the interest rates that the residents of other countries will receive if they opt for an in-kind interest payout. The current in-kind reward rate that Celsius Network pays on Chainlink is 4.51% APY.
Is it Risky Earning Interest on Chainlink?
There is no doubt that earning interest on Chainlink is an attractive proposition. Yet, we should not deny that there is risk in it. The interest account providers make money by lending cryptocurrencies and fiat currencies. From their income, they pay interest to their interest account holders for depositing cryptocurrencies and fiat currencies.
As these platforms make money by lending cryptocurrencies and fiat currencies, there is a risk. But they manage it by making over-collateralization mandatory for borrowers. But a few platforms do not require over-collateralization to borrow from them, and the level of risk is higher if you opt for such a platform to earn interest on Chainlink.
If their borrowers start defaulting on their loans, the platform won't pay interest to their interest account holders. If default numbers start increasing considerably, the platform may even go bankrupt. In case of bankruptcy, you will lose access to your funds as the platform won't be able to refund them. The platform won't even be able to pay the interest amount that they were liable for paying.
Many platforms today have insured their insurance funds. But the risk is still there. In most cases, the insurance amount is a couple of hundred million dollars. If the losses are equal to or less than the insured amount, the platform will be able to refund the entire amount to their interest account holders. But if the losses are more than the insured amount, it won't be enough to refund the entire sum to the platform's user funds.
To ensure that you earn interest on your Chainlink holdings at the minimum risk possible, you must do research well while choosing a platform. You can also read our in-depth reviews on almost every major interest account provider to choose the best platform.
What to Look for When Choosing a Platform?
You must ensure that the platform that you choose meets a few criteria for earning interest on Chainlink. Only then would your Chainlink holdings be safe. The two most crucial factors are interest rates and the industry standing of the platform offering Chainlink interest accounts.
New platforms offer the highest interest rates to attract new users. But the risk is higher too when compared to the established platforms. That is why you should not opt for a platform offering the highest interest rates without researching them in detail.
Another important criterion to check for is insurance. Check if the platform has insured its user funds or not. If the platform suffers from a hacking attack or if there's a rug pull or in case of bankruptcy, the insurance company will pay the insurance amount to the company. The platform will use the funds to refund their interest account holders. Depending on the insured amount and the amount lost by the platform, the interest account holders will receive back the entire amount or only a part of it.
After insurance, check the criteria that the platform has to become eligible for the highest interest rates offered by them. Many platforms mandate receiving interest payout in the platform's native token to become eligible for the highest interest rates. Some platforms require that the interest account holders hold a part of their investment portfolio in the platform's native token. A few platforms only offer the highest interest rates to interest account holders that meet both of these criteria.
Before you opt for a platform based on interest rates and the platform's standing in the industry, you must also check if there are any minimum deposit requirements to earn interest on the platform. If there is such a requirement, you won't be able to earn interest if you deposit an amount of Chainlink worth less than the minimum amount required.
If you want to withdraw the funds at any time, look for a platform that offers flexible accounts, as a fixed account won't suit you. If you opt for a fixed account, your funds will remain locked for a few weeks to a couple of months, during which you won't be able to withdraw the funds from the platform.
Depending on the platform you choose, the interest payout will also vary. Interest payout duration is daily, weekly, and monthly. If you want to earn interest daily, then check for a platform that pays interest daily. If you want to receive the interest payment weekly or monthly, then choose the platform offering interest payout in such durations.