The second-largest cryptocurrency in terms of market capitalization is Ethereum and its value has gained faster than Bitcoin in the last 12 months. It is easily distinguishable from the pioneer cryptocurrency because Ethereum allows people to use smart contracts on its blockchain. These are code on the blockchain, which can be used for autonomously handling crypto assets and enable you to earn some interest on your Ethereum tokens in different ways.

The most common way of earning interest on Ethereum is via Ethereum loans and staking. There are lending platforms like Celsius and BlockFi that offer savings accounts to users with annual interest rates between 5.25% and 6.35%. These platforms utilize your funds for supplying loans to retail and institutional investors and they give you a competitive interest rate for doing so. Furthermore, you can also stake your Ethereum tokens on the Eth 2.0 beacon chain for earning annual interest between 4% and 10%.

Ethereum staking is being utilized for the purpose of upgrading the Ethereum blockchain to the Proof-of-Stake (PoS) consensus. This upgrade will significantly lower the cost of conducting transactions on the Ethereum blockchain and also increase the transaction throughput significantly. It is essential to bear in mind that if you decide to stake your Ethereum tokens, you will not be able to withdraw them until the Eth 2.0 upgrade is complete. The steps you need to follow are:

Step 1: Open a crypto account

There are a number of platforms that give you the opportunity of earning interest on your Ethereum tokens. You receive the interest in the form of Ethereum, so your interest and the initial investment will appreciate if the value of the Ethereum token goes up. However, if the value of Ethereum depreciates, then your initial investment and interest will decline in value.

Some leading lending platforms that provide you competitive interest-bearing accounts for Ethereum are BlockFi, Celsius, and Nexio.io. These platforms also give you the option of obtaining loans in cryptocurrency, but you have to deposit cryptocurrencies as collateral. This is an excellent option for investors who want money, but don’t wish to sell their crypto holdings.

You can also stake Ethereum by opening an account with a crypto exchange. Staking Ethereum is an excellent way of earning some interest, as it is a simple and secure way of earning more Ethereum. You can start staking Ethereum right away on Kraken or join the wait-list for staking it on Coinbase. It is also possible to stake independently by using an Ethereum wallet, such as Argent. But, you have to have at least 32 Ethereum tokens for independent staking.

Step 2: Check out the interest rates

When it comes to crypto lending platforms, they calculate interest rates based on the supply and demand for loans. While these interest rates tend to be relatively stable, there isn’t any guarantee that you will be able to earn 5% to 7% annually in the long run. It is a great idea for monitoring the interest rate you earn on your Ethereum tokens every now and then, so you will know exactly how much you are earning.

If you want to stake your Ethereum tokens, then you should be aware that the interest rate will fluctuate according to the supply of the Ether tokens that are staked. As per estimates, you can earn anywhere between 5% and 10% annually via Ethereum staking.

Step 3: Add Ethereum to your portfolio

You need Ethereum tokens for funding your account and if you don’t already own some, then use bank transfer for wiring funds to your BlockFi account. Otherwise, you will have to buy Ethereum from a crypto exchange and send it to the platform from where you wish to earn interest. Some exchanges, such as Kraken and Coinbase, give you the option of earning interest directly on their platform via staking.

Step 4: Start earning interest

The interest rate you get will differ, depending on whether you use a lending platform or stake your Ethereum tokens. Staking your tokens on Eth 2.0 means they will be locked up for a year at least, so you cannot access your tokens even if the rate declines. When using a lending platform, always monitor fluctuations in interest rates because you may be able to use several platforms for earning the most interest.

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