While most tech stock investors aren’t earning any form of a dividend, and may not see one for years… In the New Digital World, crypto has been paying yield all along – to those who “stake” their coins.
That’s because crypto projects have a special incentive to pay these yields. It’s not just about attracting investors, like a traditional dividend. It’s about growing the blockchain – while helping secure it.
After all, “staking” really means participating in a proof-of-stake consensus mechanism. To make the blockchain “go,” every new block has to be validated… And when you volunteer for this process – you earn staking rewards. Rewards that are way bigger than you’d get waiting around for stock dividends or bond payments: 3%, 5%, even 10% in many cases!
With those kinds of yields, you can really compound your gains over time. But, of course, you’ve got to make sure it’s an investment that’s worth accumulating. Luckily, a top-notch crypto is adding liquid staking – for 10% yields!
Why Is Liquid Staking All The Rage?
“We’re in sort of a war between decentralized and centralized exchanges,” according to Billy Rennekamp of Cosmos (ATOM-USD), which is adding liquid staking this quarter, in its Rho upgrade.
Rennekamp, who appeared on Tuesday’s Untold Stories podcast (hosted by our own Charlie Shrem), is the Cosmos Hub Lead. As such, he’s helping build a decentralized “internet of blockchains” that can communicate in a shared language.
The goal is for blockchains to reach their full potential by collaborating – rather than competing for users. That way, more crypto projects grow and thrive. And Web3 proliferates into a vast, viable alternative to Web 2.0…getting us all out from under the thumb of a few tech giants.
But along the way, lots of this crypto is ending up under the thumb of a few centralized exchanges – like Coinbase (NASDAQ:COIN), Binance (BNB-USD), and FTX (FTT-USD).
For Cosmos and its peers, this is a problem for their network security, not to mention their ideals of decentralization.
But for users, it makes sense:
To stake your crypto on a blockchain, you’ve got to lock up your coins in the consensus mechanism. You can’t use that crypto for anything else – and there’s a waiting period to take it out. So, if the price heads “to the moon,” you might not be able to realize those profits.
On the other hand, Coinbase and friends are staking some of that crypto people have been putting on their exchanges. To encourage you to join them, they’ll let you share in the staking rewards… And they’ll still let you trade your tokens whenever you want.
To regain the upper hand, more and more decentralized networks are allowing liquid staking.
Now on Cosmos, for example, you’ll be able to “take your tokens, delegate it to a validator, earn your rewards, but you can convert them into what’s called a staking voucher,” Rennekamp explains on Untold Stories. “While you’re still earning rewards – because they’re locked up in the network – you have this kind of coupon that you can move around and sell.”
As soon as Cosmos Hub makes that Rho upgrade, you’ll be able to stake and accumulate ATOM with no lock-up…at a rate of 9.7%! Here’s why you’ll want to.
Exploring Cosmos
Cosmos’ single-minded focus on interoperability is a “huge idea,” according to Luke Lango – who names Cosmos as one of Crypto’s Next Blockbuster Coins for his Crypto Investor Network.
Thanks to the Cosmos Hub, “market participants can freely and fluidly exchange digital assets and data from different blockchains – without having to change wallets and jump between different platforms,” Luke’s report explains. “Making things interoperable through a single marketplace will reduce what we see as one of the biggest hurdles to mainstream adoption of cryptos.”
Of course… What’s also reached the mainstream news is the disastrous failure of blockchain “bridges” to prevent the $600 million hack of Ronin Bridge…not to mention the previous Wormhole bridge hack ($320 million).
In both instances, such prominent voices in crypto as Cathie Wood’s ARK analysts came out in favor of Cosmos – as well as Polkadot (DOT-USD), another of our picks. “The prevalence of cross-chain attacks could spur interest in blockchain networks designed for interoperability like Polkadot and Cosmos,” ARK Invest has been saying since February.
Perhaps this is also why Grayscale Investments – the largest digital asset manager – just added Polkadot to its Digital Large Cap Fund… and Cosmos to its Smart Contract Platform Ex-Ethereum Fund.
Cosmos’ ecosystem is especially robust – early evidence that it can live up to its branding as “the internet of blockchains”:
Source: Istari Ventures via @CosmoKramer95 on Twitter
Cosmos’ line-up of 49 apps and services boasts such household names in the New Digital World as Binance Coin…and the up-and-coming DeFi, THORChain (RUNE-USD). Blockchains using Cosmos’ Inter-Blockchain Communications protocol, specifically, include Terra (LUNA-USD), its UST stablecoin, and Crypto.com (CRO-USD).
“With over $32 billion currently locked in Cosmos, it’s one of the largest networks in terms of TVL,” or total value locked, reports CryptoSlate.
And because the Cosmos Hub is so huge, crypto developers can come to Cosmos for Interchain Security.
“It’s sort of the same experience as deploying a dApp to Ethereum: you don’t have to worry about securing your network,” Rennekamp explains. “Cosmos Hub, which has one of the highest market cap security chains in the Cosmos ecosystem, will secure it for you.” Plus, if you go with Cosmos, you can have “application-specific blockchains” – and don’t have “to share all the resources with all the other apps” on Ethereum.
As Cosmos grows its empire, the rest of us can say goodbye to those rickety bridges, too! “Rather than users simply transferring tokens and following them across different chains, Interchain Accounts provide access to all IBC-enabled Cosmos chains straight from one Cosmos Hub account,” as Cosmos explained when it released this feature in February.
Bottom line: “Whatever company or project solves [the interoperability] problem will unlock significant economic value,” Luke notes for his Crypto Investor Network… and “our favorite horse in this race” is Cosmos.
On the date of publication, Ashley Cassell did not have (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. To have more news from The New Digital World sent to your inbox, click here to sign up for the newsletter.
