Crypto Exchanges Provide Financial Possibilities Beyond Staking and Lending
01/08/2025 04:03
Crypto exchanges now make monetizing one's interests and passions possible. Memecoin traders are increasingly turning to exchanges that list tokens with actual utility.
Considering the familiar four-year cycles in crypto, 2025 has all the makings of a bullish year. The cycle is expected to be different this time around due to adoption on an unprecedented scale. Institutions, governments, and investors are embracing cryptocurrencies, and Donald Trump's public endorsement of the asset class reflects this major shift. More straightforward regulations and initiatives like the Bitcoin Strategic Reserve are building the foundation for large-scale integration.
The combination of institutional backing and regulatory clarity could result in 2025 becoming the year when digital assets finally become a permanent fixture in the world economy. Until recently, staking and lending were the primary financial possibilities open to cryptocurrency investors. Staking involves validating transactions and earning yields from other assets, while lending entails loaning out crypto to other users and earning interest on the assets. The actual interest depends on market conditions, borrower creditworthiness, etc.
Crypto exchanges, which remain a central transaction hub, provide possibilities beyond staking and lending in 2025. Sports fans can monetize their passion with the help of leading crypto exchange crypto.com, which has launched the first sports event trading product in history. The exchange is paying out $1 million through the Cronos Crypto Basket. Those interested in winning a share must open an account and make a sports trade. When a user successfully signs up for a crypto.com account with a friend's referral link or code, and both complete their first sports event contract trade, they receive CRO worth $10.
In another first for the crypto industry, Nexo launched an exchange-traded fund combining spot BTC and Carbon Credit Futures (CCF) in a ratio of 80:20. The Nexo 7RCC Spot Bitcoin and CCF fund, a recently founded series of Tidal Commodities Trust I, issues common beneficial interest shares representing units of ownership and fractional, undivided interest in the fund. Carbon Credit Futures aim to reduce greenhouse gases over time. They are designed to track the performance of a portfolio consisting of 20% CCF and 80% Bitcoin. The futures contracts are connected to the values of emissions allowances issued under the California Carbon Allowance, the EU Carbon Emissions Allowance, and the Regional Greenhouse Gas Initiative. Neither the fund nor the Trust is registered under the Investment Company Act of 1940, making this a high-risk investment product. However, Nexo's initiative is part of a broader trend in sustainable finance, where investors seek a balance between environmental impact and financial returns. The product can help those passionate about environmental protection monetize their admirable efforts and beliefs.
Exchanges that can process transactions and transfer funds quickly promote arbitrage trading, which entails profiting from price differences. A trader buys a cryptocurrency on one exchange for a lower price and sells it for a higher price on another exchange. Price differences between exchanges are not uncommon in the market due to the fragmented and decentralized nature of liquidity. Arbitrage trading doesn't rely on price direction, which makes it a low-risk profit strategy. Delays or fees further reduce small profit margins, so an exchange's quality of service is paramount.
Traders capture price swings lasting from several days to a few weeks. They analyze market momentum and price charts to profit from upward and downward trends. The strategy is less time-intensive than day trading and takes advantage of medium-term trends. Most swing traders use 'take profit' and 'stop loss' to avoid missing out on profits.
Memecoin trading will remain popular, but most tokens provide no value beyond a sense of belonging. Exchanges provide new possibilities in this niche by offering memecoins with actual utility, such as tokenized real estate. An example is BST, the native token of Blocksquare, which aims to tokenize social housing in Canada and also focuses on sustainable energy. Around 760,000 BST have been locked into staking contracts to promote initiatives addressing societal needs in green energy and housing. Users of Blocksquare can buy, sell, and trade fractional ownership in real estate properties. Each token represents a property stake, enabling more flexible investment opportunities than traditional real estate transactions. Tokenization will emerge as a cornerstone of the current market cycle.
A new regulatory regime awaits the market, appearing ready to set clear, reasonable rules to benefit participants and open up further financial possibilities. The main use case of stablecoins will move beyond trading. Potential changes to crypto ETFs, such as staking or in-kind creations, could augment demand for digital assets.