There are several ways of investing in cryptos. Just like when investing in fiat currencies through Forex, when investing in cryptocurrencies, you trust that the price of the digital asset will rise in the future to sell them and get profits. Simple but effective. But there are other ways to obtain returns with cryptos: one of the most profitable is CDs. So, in this article, we’ll discuss the possibilities of Crypto CD and how CDs work.

A certificate of deposit refers to a savings account that keeps a specific amount of money for a set period and allows users to earn an interest rate premium after making a deposit. Banks and credit unions offer this product that looks to give the maximum interest rate in return for an undisturbed sum lump.

The same works for the blockchain and the cryptocurrency world. Here, crypto investors decide to lock up a certain percentage of their token savings to obtain an interest rate or passive income on their investments.

In a nutshell, CDs are loans you make to a financial institution. Still, terms and conditions vary depending on the issuing institution as well as the amount and period of the loan. You lose access to these funds until the CD matures.

Just to say Crypto CDs are supervised by the Federal Deposit Insurance Corporation, a specialized agency created by the government of The United States whose mission is to maintain security, public confidence, and stability in the financial system of the USA.

Crypto staking is the name that CDs receive in the crypto world. In other words, crypto staking is when you choose to lock away a particular number of assets or tokens onto the blockchain technology for a certain amount of time. This way, you will receive a financial reward for locking away your assets on the native chain. This is because, by doing this, you contribute to the general operation of the blockchain, allowing it to stay operational.

It’s important not to confuse staking with lending, in which you lend your digital assets to somebody else with the final goal of earning rewards and interest from the borrower.

In general, good certificates of deposit have a short or medium length, which means one to five years to bring important benefits to holders. Some common advantages of crypto CDs are the following:

• Technically self-custodial . Since you cannot access your assets and liquid them, your tokens are very secure. Of course, you can’t unlock your stocked tokens, which means you never hand the keys over to anybody.

• It supports the blockchain and the industry . As we mentioned earlier, CDs remain on a certain blockchain. It means when staking, you support the price and relevance of that particular blockchain of the given token. The blockchain will reward you for this.

• You get voting rights . You can vote on particular matters on certain blockchains. It is a common practice in decentralized platforms where users can vote on what assets to invest in and topics like that.

• Good return rates . Even though the return rates will depend on the platform you use and the crypto you stake, the return rates are commonly high in comparison to CDs that other financial institutions can offer. For example, staking on Polkadot can give you 14.3% APY.

The main difference between conventional CDs and crypto lies in the risk level and the possible return. When investors make a lump sum deposit, they are sure that they will receive an amount in return at the end of the investment period.

Even though most terms used in crypto CDs are very similar to those you use in regular investments in finance institutions, it does not hurt to mention them again.

• The principal . It corresponds to the total amount of crypto you want to allocate as savings and deposits.

• The term . It is the total length of time you’ve decided to leave your crypto funds. If you withdraw your money before the term ends, you will be penalized.

• The interest rate . When you’re going to deposit your crypto as savings, the platform probably will tell you what the interest rate is in the determined term. This way, you ensure a stable and systematic return over time.

• The institution . The bank, credit union, crypto platform, or exchange where you deposit your funds. The institution determines the terms and conditions of the agreement and the interest rate.

• Risk . It’s one of the primary concepts you should consider when investing in any asset. In general, cryptos are considered high-risk investments since you can lose or win a huge amount of money with them. CDs, on the other side, are low risk investments since the interest is assured.

• Liquidity . It refers to the capacity to withdraw money from an account of an institution, either a bank, a credit union, or a crypto platform. In general, crypto projects boast a very easy-to-execute liquidity strategy. CDs, on the other side, have non-existent liquidity since you don’t have to stake funds. In some cases, you can access it before the predetermined period expires, but you will probably be punished.

• Returns . Any financial product is designed to give a certain return on a particular period, and crypto CDs are no exception. The return is the amount of money you will receive after your CD is finished.

Despite the fact that cryptocurrencies have gained a lot of popularity in recent years and there are thousands or millions of people trading cryptos in the crypto market, the CD option hasn’t been explored in depth yet.

Still, some decentralized finance applications built their platforms to allow users to stake their cryptos. It’s a good way of leveraging the risk and the price movement and ensuring earnings.

In this context, crypto investors lock up a particular part of their token holdings. This way, they receive a fixed or flexible interest rate based on the amount they deposited and the terms in the agreement. Now, let’s check the more popular CD options regarding crypto platforms.

HEX’s creator defines HEX as an Ethereum token and a blockchain certificate of deposit based on a reward system. Like other tokens of the same nature, HEX users can stake batches of tokens for middle and large periods. With HEX, longer stakes are rewarded with more HEX, which means users have the opportunity to invest even more.

The return rate of HEX is significant, reaching 38% APY. It converts HEX into one of the most important crypto CDs. This crypto is a great alternative for customers who are just beginning with these operations since it guarantees a good return on investment. However, HEX usually means higher gas fees for users.

REX is the first CD or Certificate of Deposit token based on the Binance Smart Chain or BSC. This token integrates saving accounts of traditional finance institutions to ensure a profit at the end of the period. In other words, REX is both a crypto and a high-yield certificate of deposit CD, which means it mixes the values of the low and high risks and high and low returns. It offers immense flexibility and a higher rate of return than any traditional financial institution. It also offers decentralized and permissionless benefits without third-party risks or middlemen.

Staking –depositing REX for a certain period– will undoubtedly generate interest in your favor. This situation can leverage the possible losses in the token price.

Nexo allows you to earn interest at the same time you invest and hold cryptos. It’s a vast crypto environment focused on the lending sector and with several cryptocurrency-based CDs. Nexo allows you to buy crypto immediately by providing you $0.5 reward and a daily interest of 16%.

Nexo supports USDT, USDC, BTC, and other popular digital assets. You can also borrow against your assets and get liquidity against your tokens at 0% interest with its Instant Crypto Credit Lines.

YouHolder is not only a platform heavily focused on crypto-backed CD services. YouHolder has a complete range of options when it comes to investments in cryptocurrencies, trading, and staking digital assets. YouHolder gives you up to 15% interest in certain recognizable CD tokens, such as ETH and LINK.

YouHolder boasts several tools for crypto investment instruments, like the MultiHODL, a refreshing tool powered by crypto-backed loans that will help you capitalize on market volatility by holding several crypto and leveraging losses and earnings. Contrary to other decentralized finance applications, YouHolder allows you to get instant cash through its crypto loans.

KuCoin is one of the most important platforms when it comes to crypto development services since it offers hundreds of cryptos to trade as well as saving accounts to its user base. All these services are connected to its cloud-mining and staking solutions, which ensure thriving personal finance, contrary to its traditional finance counterparts.

KuCoin is equally flexible as REX and boasts a wide range of altcoins. However, regardless of its compound interest, it offers a low APR for some cryptos –0.18% for BTC.

When miners create a particular Bitcoin, they need to pay for server costs, energy consumption, and other service to the blockchain. This is why they reward holders when they decide to lock up their assets in the blockchain. This way, they ensure stability to the system and are capable of paying the debts. 

Staking crypto, or crypto CDs, is a good movement to start earning profits just by keeping your crypto savings. Consider it when you invest in crypto and see how your capital grows.