The Best Crypto Compound Interest Strategy?! (Crazy Returns)

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By Connor
Estimated reading: 5mins
Crypto Compound Interest

Are you tired of the meager returns that you’re getting from your savings account or stock portfolio?

Well, there’s actually a way to benefit from MUCH higher interest rates.

That’s thanks to the world of crypto compound interest, which is akin to discovering a treasure trove in the digital realm. 

It can let you effortlessly multiply your cryptocurrency holdings over time, simply by letting your assets work for you. 

While I’m not providing financial advice, I will share what I’ve learned about how to make the most out of crypto compound interest.

This article is part of the Chain Reactions series: expert opinions on everything blockchain and crypto.

What is Crypto Compound Interest?

Crypto compound interest refers to the process of earning interest on both the initial principal and the accumulated interest of a cryptocurrency investment over time. 

Unlike traditional finance, where interest is typically earned on a fixed principal amount, crypto compound interest lets investors reinvest their earnings automatically.

This, in turn, can lead to exponential growth.

Depending on the specific cryptocurrency and platform, you can compound your interest on regular intervals, such as weekly or daily.

If you wanted to, you could even compound your interest every 11 seconds.

Making the most out of crypto compound interest can be a way for investors to achieve significant wealth accumulation over the long term. 

Here’s what it looks like.

Compounding Your Crypto with Liquid Loans

Liquid Loans offers the best opportunity to implement crypto compound interest.

It’s a fully-decentralized protocol on PulseChain, offering two distinct but interconnected yield bearing tools:

The Stability Pool. 

The Stability Pool accepts USDL, a decentralized stablecoin pegged to the price of the US dollar. In return for providing stability, users receive both PLS from liquidation gains and LOAN token rewards.

From April 29th, 2024 to May 5th, 2024, the 7 day rolling average was 30%.

More specifically, 1.41% APR came in the form of PLS from liquidations, while 28.59% of this came in the form of LOAN token from rewards emissions.

Alright, if you don't feel like reading until the end, here's the difference between simple interest and daily compounding over 15 years of the Stability Pool.

DeFi Compound Interest

But the LOAN Staking Pool is even better.

The LOAN Staking Pool

Users who stake their LOAN tokens in the Staking Pool earn both PLS from redemption fees and USDL from borrowing fees.

The 7 day rolling average from the same time period was 20%.

More specifically, 9% of the APR came in USDL from borrowing fees and 11% from PLS from redemptions fees.

Daily Crypto Compound Interest

How Much Could You Earn From Daily Compound Interest?

Here’s where it gets fun.

Let’s run some numbers to estimate the kinds of rewards you can earn by compounding your earnings from the Staking Pool and Stability Pool.

For the purpose of this example, let’s pretend that the price of LOAN, USDL, and PLS—as well as the current APR—will not change for the length of this investment.

Let’s also pretend that you start with 10,000 USD worth of LOAN in the Staking Pool and 10,000 USD worth of USDL in the Stability Pool.

How Much Would You Have Earned in 1 Year?

Stick around until the end of these calculations. The difference between 15 years without compounding versus with compounding is astounding!

Without Compound Interest

With the figures provided in this example, you would have earned $2,859 USD worth of LOAN token and $141 USD worth of PLS from the Stability Pool.

You would have also earned 900 USDL and $1,100 USD worth of PLS from the Staking Pool.

By the end of the year, you would have $10,900 USD worth of USDL and $12,859 USD worth of LOAN.

There’s no question that these are great returns!


Here’s how you can earn WAY MORE when you start compounding.

With Daily Crypto Compound Interest

In this same scenario, let’s say that you took all of the LOAN you earned from the Stability Pool and staked it daily into the LOAN Staking Pool.

At the same time, let’s say that you took all the USDL you earned each day and recycled it into the Stability Pool as well.

As a result, your earnings would have been significantly higher.

In this example, what would have been $10,900 USDL would now be $10,941 USDL.

More importantly, what would have been $12,859 USD worth of LOAN without taking advantage of daily compound interest would now be $13,308 USD worth of LOAN!

And that’s extra money you earned without doing any extra work.

But that’s just one year.

If you’re in it for the long haul, things start to get really crazy…

How Much Would You Have Earned in 5 Years?

Let’s say you compounded your crypto earnings for five years at the same APR and prices as in our previous example.

If you never compounded your earnings, you would have $14,500 USDL total. But by compounding daily, you would have $15,689 USDL.

In addition, if you never compounded your returns, you would have $24,295 USD worth of LOAN. 

But, if you compounded daily, your LOAN would be worth $41,725 USD!!!

15 Years of Daily Compounding

In this example, holding for 15 years without compound interest would mean having $23,500 USDL and $52,885 USD worth of LOAN.

But, if you took advantage of daily crypto compound interest, you would instead have $38,568 USDL and an unbelievable $727,349 USD worth of LOAN!!

Finding What Works Best For You

While this is only an example using today’s APRs and prices—which could change for better or worse in the future—it does highlight the TRUE power of compound interest. 

By using crypto compound interest, you can extract the highest earnings possible from your existing investments. In other words, it’s a way to earn more money without having to invest more money upfront. 

Check out the Liquid Loans DApp today to take advantage of the true potential of crypto compound interest.

Join The Leading Crypto Channel


Disclaimer:Please note that nothing on this website constitutes financial advice. Whilst every effort has been made to ensure that the information provided on this website is accurate, individuals must not rely on this information to make a financial or investment decision. Before making any decision, we strongly recommend you consult a qualified professional who should take into account your specific investment objectives, financial situation and individual needs.

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Connor is a US-based digital marketer and writer. He has a diverse military and academic background, but developed a passion over the years for blockchain and DeFi because of their potential to provide censorship resistance and financial freedom. Connor is dedicated to educating and inspiring others in the space, and is an active member and investor in the Ethereum, Hex, and PulseChain communities.

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