Most people want to profit on their investments. However, the main avenue for earning yield on crypto has long been to sell off your digital assets and miss out on what the landscape actually has to offer.
While there are ways to earn a profit in the crypto space without selling your coins, these methods have traditionally been risky or cumbersome.
That’s why Liquid Loans has set out to give PulseChain (PLS) holders a way to easily earn yield on their PLS without ever having to sell their coins. Here’s how.
One of Liquid Loans’ core missions is to give PulseChain holders a way to extract value from their crypto without having to sell their PLS.
Before we get into how Liquid Loans makes this possible, let’s explore how the #NeverSelling movement actually benefits crypto holders.
Importantly, when you sell your coins, you forfeit the opportunity to enjoy the gains that come with a token climbing in value. For instance, if you sold your PLS before a significant price hike, you would miss out on substantial earnings.
This “fear of missing out” often deters long-term investors from selling their coins, especially considering some of the major price hikes that the crypto space has enjoyed over the past few years.
Another important consideration is that, while investing in crypto is often done with the explicit hope of turning a profit, many people earnestly care about the projects they support and want access to its features. As such, having to cash out is a far from ideal option.
Last but not least, another reason to avoid selling your PLS has to do with everyone’s favorite topic: taxes.
Across the world, many countries define your crypto tax obligations as occurring at the moment at which you realize your gains or losses by converting your digital assets to fiat currencies.
Canada’s crypto tax framework, suggests that capital gains tax applies specifically when people gift, purchase goods, or sell cryptocurrency for Canadian dollars. Exchanging from one digital asset to another, on the other hand, is not listed as a taxable event.
While this will depend on your own jurisdiction and tax obligations, extracting value from your holdings without selling can be a way to avoid significant taxes.
For instance, one of the main ways to extract value from PLS without selling is through liquidity providing.
Yield farming in this way is a process in which users provide liquidity by locking away both assets in a trading pair. For instance, a user could put up an equal amount of ETH and PLS through a platform like PulseX.
In exchange for providing this liquidity to the network, the user then receives a yield based on the amount of liquidity they provide.
However, this can place users at risk of what's known as an impermanent loss.
Impermanent losses occur when the value of one token in a trading pair changes dramatically, causing the liquidity provider to take a financial hit.
This is known as an impermanent loss because it is only realized at the point at which you withdraw your funds from the network. Still, this is a risk that many people would understandably prefer to avoid.
Another way to earn yield on your PLS is through running a validator. This is a process in which users stake a portion of your PLS in the network in exchange for earning a return on their stake over time.
Running a validator, however, can be a complicated process. In order to avoid network penalties, it requires significant uptime and the correct setup and maintenance. As a result, it is simply not an ideal method of earning yield for many PulseChain holders.
Liquid Loans was designed to give PulseChain holders a way to earn yield on their PLS without ever having to sell their coins.
This can be done in a few simple ways.
Liquid Loans is always overcollateralized. This important feature is achieved through the ecosystem’s Stability Pool.
Holders of Liquid Loans’ decentralized stablecoin, USDL, can become Stability Providers as a way to earn yield on their PLS while #NeverSelling.
When you deposit USDL into the Stability Pool, you earn financial rewards in the form of PLS and LOAN tokens. These can then be spent freely without having to convert your digital assets to a fiat currency. This can allow you to keep benefitting from the projects you love and potentially avoid a taxable event.
In order to encourage liquidity during the network’s initial launch, Liquid Loans is giving users the opportunity to earn additional passive income for the first 42 days of the network’s launch.
By providing liquidity on PulseX for the USDL:PLS trading pair specifically, you earn extra financial rewards in the form of LOAN tokens.
While some users may find that this method is less ideal than becoming a Stability Provider due to the risk of impermanent loss, the additional LP rewards offered during this initial 42-day period may make this method an attractive option for others.
As such, you could choose to easily yield farm the USDL:PLS trading pair and extract value from your PLS without having to cash out.
Since USDL is a stablecoin, it is not designed to substantially appreciate in price in the same way as other tokens like LOAN and PLS.
However, when users earn USDL through Liquid Loans, they can then reinvest their USDL into other yield-bearing assets.
For instance, you could use your USDL to purchase other digital assets that you believe are likely to appreciate in value. Alternatively, you could use USDL to invest in traditional financial assets that exist off-chain.
While this is a riskier way of earning yield than using Liquid Loans’ built-in Stability Pool, it does serve as yet another way for users to extract value without selling their PLS.
Regardless of the method that you use to earn yield, you won’t have to miss out on the benefits of PulseChain or depreciate your holdings as a consequence of selling. With Liquid Loans, there is a whole world of new opportunities for users to create and extract value from their digital holdings.
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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.
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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