Basics of making money on smart contracts

The type of project does not matter, in any case you need to secure your money. The minimum required set of verification includes:

• The results of an independent audit.
• Checking the publicity of the code.
• Conditions of participation.
• Marketing.
• Term of employment (history).
• The team.

Independent audit

Honest business owners order an audit from third-party companies. The results of the audit are posted in free access. This is a confirmation of the honesty of the project, absence of errors in the code, fraudulent intentions.

If the team did not conduct an independent audit or hides the results, you should think about it. It is not necessarily fraudsters, but it is better to protect your assets and find another use for them.

The mere presence of an audit report on the site should not stop a potential investor. It is necessary to carefully study the materials, pay attention to:

• The essence of the audit. What the auditor reviewed and described in the report.
• Who was involved to study the documentation. The identity of the auditor, his prominence.
• Presence of the audit report on the website of the project and the company that conducted the assessment. It is quite possible to cheat when the developer faked the audit report and posted it at their place. There was nothing on the company’s website, they didn’t even know about the fact of the audit.

Auditors are human beings who can make mistakes, miss important points in the program or conditions.

Checking the publicity of the code

Projects put the program part in the public domain, for example, on GitHub. This is necessary to be able to check the code for errors, vulnerabilities. It is necessary to know the programming languages and peculiarities of application development.

In addition to Ethereum, there are other blockchains. They differ in programming language, algorithms, and other features.

A closed project should already alert a potential investor. It means that the developers are hiding something, do not want to show the public. This is at least suspicious, it is worth taking a closer look.

Terms of participation

Program code and technical documentation of the startup – this is not all that a potential investor should be interested in. It is necessary to check the terms of participation, assess them from the point of view of profitability and prospects. Startups attract investments for development. If there are no plans, then in the future there will be no return for investors either. At best it is a HYIP-project, at worst – scam. Fraudsters can collect funds from gullible investors and close the startup, taking investors’ money.

Separately, it is worth mentioning HYIPs on smart contracts. These are ordinary financial pyramids, each new user is a source of income for previous participants up to the organizers. Smart-contract provides trust, excludes the human factor in the distribution of profits. Such projects are not real sources of income on the blockchain. They are more fraudulent ways to earn money.

Marketing

Promotion of the project affects the speed and volume of fundraising. And from this depend on the output on the working mode, development and return – profit of investors, payment of dividends. Advertising takes place in social networks, on specialized forums, thematic media. Everything is determined by the budget and the desire of the owners to promote their development. The lack of marketing indicates an “empty shell”, in which no one will invest, and it will not bring dividends in the future. Tokens of such a service are worthless, they can not even be sold.

List of deposits

Openness is the main chip of any honest project. If the developers hide information about the collected amount, the data on the deposit is encrypted, then you should not contact the company. You can not get income here, but you can lose money.

Professional team

The website should have information about the founders of the startup. Without complete information about the people to whom the investor is going to entrust his money, it is not worth even considering the company as a source of income.

Examples of projects

Each direction of earning money on smart contracts contains many options to choose from. Examples of stock lending platforms:

These are all examples of stockbroker lending platforms. Different types of deposits are available: floating or fixed rate, stock, dynamic, static, market. Each stock exchange offers different options.

In addition to trading platforms, there are lending platforms:

• Blockfi
• Nexo
• Celsius network and others.

Platforms are intermediaries between users. Some act as lenders, others as borrowers.

Lending on exchanges and lending platforms is different. The former provide access to trading and other sources of income. Exchanges themselves borrow, raising liquidity. Lending platforms more often insure depositors’ funds.

Liquiditymining is another example of making money from smart contracts. Exchanges borrow from their customers to raise assets. In return, they provide project tokens, which the owner sells.

It is possible to make money on steaking with cryptocurrency that supports the PoS algorithm and other similar methods of transaction confirmation. There are exchanges, wallets or decentralized applications for this purpose. Popular cryptocurrencies for steaking:

Making money from an ICO is simple. You need to identify a project, the potential of which will allow you to make a profit in the future on the growth of the rate of the asset, invest money. It is better to participate in the early stages of the ICO. There is a higher probability of income, discounts of up to 70%. It is necessary to conduct a comprehensive analysis, understand at what stage to contribute assets. The main risks of earning money on the ICO:

• Low prospects of the selected project.
• Volatility of assets, the token can fall in price following the market.
• Scam. Fraudsters also want to earn money, create pseudo-startups, the purpose of which is to collect money.

To get money as a result of the activities of scammers is unrealistic. There are few such examples.

Algorithm of actions when investing

Before investing in passive earnings on smart contracts, you need to carefully analyze the options and choose a safe one. A simple principle applies here – projects with high income are high-risk and vice versa. A balance between the willingness to lose cryptocurrency and the desire to earn a lot is important.

Large platforms (exchanges, lending services, DeFi applications) are safer than unknown startups.

There are risks, for example, of a hacker attack. The exchange can lose its money and clients. It is very difficult to get them back.

The algorithm of actions when choosing a crowdsale is simple:

• Determine the relevance and prospects of the startup.
• Study documents, team, audit acts.
• Choose a platform for investment.
• Read reviews on thematic forums, including contributors who have already invested.

Among the examples of profitable ICOs, whose investors have made a lot of money: Polkadex (DeFi exchange), OMG (platform for access to financial services), TRX (platform for content exchange) and others.

Summary

Smart contracts are a promising technology that provides blockchain and distributed ledgers with a great future. There are already entire industries where serious funding is being put into budgets for project implementation. In addition to lending, steaking and other passive income options, programmers can earn money on smart contracts. After all, blockchain is code. To create applications, implement them in enterprises, government agencies, financial organizations, you need experienced professionals with knowledge of the relevant languages.

Frequently Asked Questions