An investment advice that most successful investors swear by is “don’t put all your eggs in one basket.” This holds true not just for traditional investments but for cryptocurrencies as well. Considering the fact that cryptocurrencies come with added volatility and risk factors, the concept of diversification becomes even more important.
Sure, cryptocurrencies are a single asset class, yet, even within this, there are products, coins, and tokens that allow for diversification of our investments. Diversifying across these products balances out the risk and adds stability to the portfolio. However, properly diversifying your crypto portfolio takes a lot of time, effort, research, and not to forget the money.
While the time, effort, and research parts of it are inevitable, there are numerous ways in which users can add crypto to their portfolio and diversify it without overspending. From crypto mining to reward tokens, here’s how investors can diversify their portfolios with minimal expenditure.
For the tech-savvy, one of the best ways to add a crypto to their portfolio would be to mine it. Mining is the process through which transactions are verified and blocks are added to the blockchain. Depending on the network they choose to mine for, the mining process can range anywhere from solving complicated puzzles to locking up existing assets in exchange for mining rewards that they can then add to their portfolio.
With the rise of decentralized finance (DeFi) also came the rise of various decentralized lending and borrowing protocols and decentralized exchanges. By providing liquidity to these protocols, investors can earn interests and rewards that can effectively diversify their portfolio. All they have to do is lock their existing assets in a smart contract on these protocols. The protocol then uses the locked asset for its intended purpose and in return shares the interest and reward with the users.
Every blockchain-based protocol incentivizes its users with rewards in one way or the other but some protocols focus primarily on providing exponential rewards to the community. By investing in a protocol like this, users can reap rewards and greatly diversify their portfolios with minimal effort. One such protocol is Aurum ($AUR) boasting a never-seen-before reward system that has become the gold standard for reward tokenomics. Simply put, the protocol charges a transaction tax for every buy/sell transaction made on the network and redistributes the tax as rewards to its community. The best part about Aurum is that users can get the rewards in any BEP-20 token of their choice.
This means by investing in one protocol, they can receive rewards in the token of another protocol without the need to invest additional capital, thus, greatly diversifying their investment portfolio with ease.
New crypto projects and protocols often conduct airdrop campaigns to give away free tokens as a part of their marketing strategy. This is an excellent way for users to get early access to high-potential tokens for free and add them to their portfolios. The downside, however, is that not all new crypto projects take off and the profits on these tokens could sometimes be negligible. Yet, it’s a chance worth taking as airdrops come with minimal risk and may bring great rewards.
The Importance of a Diversified Portfolio
We can compare cryptocurrencies to the early days of the internet. While people speculate, they grow and reach new heights. With more technological advancements coming in this space, tech futurists believe that cryptocurrencies could be the next big thing, and investing now may be a wise thing to do.
In this context, having a robust investment strategy and a diversified portfolio can not just reduce risk but put investors in a position to profit from all the future gains in the crypto market. Tokens like AUR that easily facilitate easy diversification should be on investors’ radar, particularly in light of a promising looking market.
Name: Kelvin Ha
Email: [email protected]
Disclaimer: This is a sponsored press release, and is for informational purposes only. It does not reflect the views of Crypto Daily, nor is it intended to be used as legal, tax, investment, or financial advice.
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