With the decline in Bitcoin (BTC-USD) and altcoins, there seem to be attractive crypto to buy for a medium to long-term investment horizon. Similar to equities, there are various themes and investment preferences within the cryptocurrencies space.
It seems like a good time to explore these themes and create a diversified portfolio.
As an example, some investors prefer to hold dividend stocks over growth stocks. Dividends stocks provide investors with regular cash flows. Staking or passive income is something similar in the crypto space. Investors can buy certain coins or tokens and stake them for passive income.
Coinbase (NASDAQ:COIN) defines staking as a “process of actively participating in transaction validation (similar to mining) on a proof-of-stake (PoS) blockchain.”
To keep it simple, if a token has a 100% annual percentage yield (APY) on staking, buying and staking the token would help an investor double the number of tokens in their wallet in 12 months. Of course, staking is similar to equity dilution.
Aggressive staking income would also imply that the price of the coin trends lower. However, if the project has a strong utility, the dilution impact is more than offset by project development. The end result is robust passive income.
I believe that a cryptocurrency portfolio needs to be diversified in terms of holding blue-chip coins (top 20 coins) and growth coins. Furthermore, passive income also helps in boosting returns and creating a portfolio that comfortably beats inflation.
Let’s have a look at seven cryptos to buy that offer healthy staking income:
- Tether (USDT)
- Bitcoin (BTC-USD)
- Ethereum (ETH-USD)
- Klima Dao (KLIMA-USD)
- MojitoSwap (MJT-USD)
- PAX Gold (PAXG-USD)
- Ideamarket (IMO-USD)
Cryptos to Buy for Healthy Staking Income: Tether (USDT)
As an overview, Tether is a cryptocurrency that’s hosted on Bitcoin, Ethereum and other blockchains. It’s also known as a stablecoin with its market value being pegged to a fiat currency. Therefore, the primary objective of Tether is a maintain its value at $1.
While creating a portfolio of cryptocurrencies, investors can hold some assets in Tether. In the event of any significant correction, USDT coin can be used to buy other cryptocurrencies. When it’s a bear market for all cryptocurrencies, it’s a bull-market for Tether from the perspective of growth in purchasing power.
Recently, U.S. inflation hit a 40-year high of 7.9%. Currently, Tether can be staked on AscendEX exchange at an APY of 8.33%. The staking is for a flexible term and the deposit and yield assets are USDT coin.
Therefore, just by staking a stablecoin, investors can beat inflation. This is at a time when deposit in a bank would yield negative real interest rates. Of course, staking yields are different for USDT in different exchanges. However, even at a lower yield, it makes sense to park some dollars in USDT coin for returns that comfortably beats the bank saving rate.
There seems to be some reversal in momentum for Bitcoin with the digital currency trading above $40,000. I believe that staking Bitcoin is a good idea even if the APY is moderate.
A key reason is that Bitcoin is similar to a large-cap blue-chip stock. Even if the passive income is low, Bitcoin is a key asset in the crypto portfolio.
Also, with factors of global inflation, limited supply and wider crypto adoption, Bitcoin is positioned to remain in an uptrend.
Binance is the largest centralized exchange in the world. Currently, it offers DeFi staking for assets like Bitcoin and Ethereum. Investors can lock Bitcoin for 60 days for an estimated APY of 8.19%. Flexible locking is also available, but has a low APY of 1.3%.
For investors bullish on the long-term outlook for Bitcoin, it makes sense to go for locking the asset for 60 days. Even here, the returns will beat the rate of inflation. At the same time, if Bitcoin trends higher, the total returns swell.
Cryptos to Buy for Healthy Staking Income: Ethereum (ETH)
Ethereum staking is also available for investors using Binance. The centralized exchange currently offers an APY of 10.12% for a 120-day lock-in period of staking. For flexible staking, the APY is significantly low at 1.5%.
However, there is a better way to stake and earn Ethereum. The Cap (CAP-USD) project is a decentralized platform for trading Bitcoin and Ethereum futures. The project offers up to 50x leverage on trading with zero fees.
The interesting point about the project is that it has a Ethereum pool that pays traders profit and receives their losses. Investors can stake in that Ethereum pool that currently offers an APY of over 100%. The staking and rewards are in Ethereum.
There is another pool that can be used to stake USDC coin and receive rewards in USDC. This pool also offers an APY of over 100%.
The Ethereum staking pool is one of my favorites. There is no place where investors can get an APY of 100% on Ethereum. It’s like owning a blue-chip stock that offers a 100% dividend yield.
Considering the nature of short-term trading and leveraged trading, it’s very likely that the APY will remain robust.
Klima Dao (KLIMA)
Klima DAO is a decentralized autonomous organization in the carbon credit market. With growing environment concerns globally, KLIMA token is attractive for exposure.
As an overview on the project, each Klima token is backed by real-world carbon assets. As of February 2022, the project claims to have 16 million carbon credit tonnes.
This surpasses Kenya and Ghana’s combined 2020 carbon emission. Further, the carbon credit is valued at $64 million. Klima has a current market capitalization of $61 million. Clearly, the token looks undervalued.
In terms of staking, Klima currently has an attractive APR of 883%. Investors can stake KLIMA token and earn sKLIMA, or staked Klima. On un-staking, the entire rewards can be converted to KLIMA tokens.
It’s important to mention here that the project had an APY of more than 4,000%. The big dilution is the reason for the token losing value on a sustained basis. However, with the DAO voting for a lower APY, the staking seems attractive.
Also, with a growing market for carbon credit and the potential demand, Klima token value is likely to trend higher as offset price increases.
According to Klima, the on-chain carbon market is likely to gain traction considering the factors of negligible fees and transparency. The token looks attractive after a big correction and some exposure can be considered at current levels for healthy staking income.
Cryptos to Buy for Healthy Staking Income: MojitoSwap (MJT)
MojitoSwap is the first audited decentralized exchange that comes with an automated market maker and a high APR.
I believe that MJT token is undervalued and worth considering at current levels. Across all LPs, the total value locked is $43 million. However, the project has a market capitalization of $14.7 million.
For staking, MojitoSwap has a segment called “Wine Pools.” MJT token can be staked to earn rewards. The current APR is robust at 93.68%. Considering the point that the project seems overvalued, staking for high APR makes sense.
MojitoSwap also has a “Bar” segment where liquidity providers can earn a robust APR. As an example, the MJT and KuCoin Token (KCS-USD) liquidity pool has a current APR of 140.27% where the rewards are earned in the form of MJT token.
Coming back to the upside potential, MojitoSwap recently accepted a strategic investment from KuCoin Labs. This provides financial flexibility to invest in MojitoSwap 2.0 for platform improvement, branding and liquidity. I would therefore add MJT to my list of top cryptos to buy.
PAX Gold (PAXG)
The trend has been positive for gold in the recent past. Accelerating inflation is one reason for gold trending higher. Even with the rate hike, real interest rate remains negative. This will ensure flow of funds to hard assets like gold. That’s all good news for PAX Gold holders.
Additionally, geo-political tensions have remained elevated. Gold has served as a store of value and investors have been diversifying their assets. With these factors in consideration, PAX Gold looks attractive.
As an overview, one PAXG token is backed by one troy ounce of London delivery gold bar. Therefore, the movement in PAXG token is in-sync with gold prices.
Coming to staking income, even gold pays dividends in the world of digital assets. Currently, Nexo provides an APR of 8% on PAXG token.
On a compounding mode, the number of PAXG would more than double in 10-years. Importantly, an APR of 8% beats the current inflation rate. This is impressive considering the upside potential for gold in the coming years.
Cryptos to Buy for Healthy Staking Income: Ideamarket (IMO)
Ideamarket is a relatively new project that values URLs, Twitter (NYSE:TWTR) profiles or insightful web pages. As an example, the Twitter profile of Elon Musk trades on the Ideamarket platform at a price of $3.12.
An investor who is bullish on the reputation and profile of Elon Musk can deposit Ethereum that bets on the profile value increasing. However, even if the value remains the same, investors benefit by locking their funds and earning high staking income.
Currently, for one-month staking, the annual perectage rate (APR) is 296.25%. For three months, the APR increases to 355.5%. However, investors get the staking income in the native token. Over the next 12 months, the project aims at distributing 13 million IMO tokens through the staking rewards.
Ideamarket currently has a total value locked of $1.1 million. As the project visibility increases and the TVL improves, it’s likely that IMO token will trend higher. I believe that it makes sense to hold the IMO tokens that investors earn from staking.
On the date of publication, Faisal Humayun did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.