26% of a deposit in two weeks: a review of passive earnings on Gate.io

Telegram channels on cryptocurrency frequently write about copy trading, presenting it as an easy way to earn money. Users hand over funds to a trading bot, which trades according to a professional trader’s strategy and earns money.

We decided to test copy trading and compare it with other passive-income methods — liquidity mining and crypto lending. We tested on Gate.io — a top-10 exchange in CoinMarketCap rankings.

Trading tools on the platform

Gate.io is a Chinese cryptocurrency exchange supporting 1,200 cryptocurrencies and daily trading volumes $4.5 billion per day. The platform began operations in the Asian market in 2013, and in 2017 opened the site for traders worldwide.

The list of Gate.io trading instruments includes:

• spot market;
• margin trading;
• settlement and delivery futures on cryptocurrencies;
• P2P marketplace;
• NFT marketplace;
• leverage tokens (ETF);
• tokenized options (Callable Bull/Bear Contracts);
• IEO platform Startup.

The drawback of speculative instruments is the need to constantly monitor the market to earn and avoid losses. Their alternative has become passive-income instruments: liquidity pools, trading bots, cryptocurrency lending, and others.

In this category Gate.io supports:

• copy trading and trading bots;
• cryptocurrency fixed-term deposits (HODL);
• regular investments using trading bots;
• lending for margin trading (Lending);
• deposits with an option (Dual Currency Product);
• earnings on a two-token deposit in AMM pools (Liquidity Mining);
• single-asset liquidity mining (Single Asset Vault);
• parachain slot auctions;
• cloud mining.

We selected three instruments from the list: copy trading, lending, and Single-Asset Vault. They generate regular income, use Tether (USDT), and are suitable for beginners. In addition, the effectiveness of such instruments can be evaluated in a matter of days.

Getting started on Gate.io

The platform does not require a mandatory KYC procedure. To register you need to enter a name, email, and password, and then a code from an email.

On each login Gate.io requires confirming that the user is not on a phishing site.

Before trading you need to enable 2FA via Google Authenticator and devise a Fund Password — the password that Gate.io will require before placing orders, exchanging tokens, and withdrawing funds.

Now you can make a deposit. We chose Tether on the Tron blockchain (USDT TRC-20) because Gate.io allows issuing it without fees.

At the time of publication, the Bitcoin withdrawal cost was about $60, and withdrawals for Ethereum and ERC-20 tokens were about $50.

Copy trading: 26% in three days or 4,600% APR

Copy trading is the copying of trades. It can be roughly divided into two types:

• automated repetition of a trader’s trades;
• launching a bot that trades according to a given strategy such as regular cryptocurrency purchases or grid trading.

Gate.io allows you to customize bots — set the conditions for opening and closing a trade — and then test them on historical data.

For example, users can set an open for a short position when the indicator RSI is above 75 and close when the price falls 3% from the entry point.

The platform displays the list of top bots on the copy trading page. Their creators receive 5% of the profits earned by users who used the strategy.

Yearly return of the bot stands at 4,600%, number of closed trades is 1,555. It trades continuously and generates profit. Moreover, the profit chart does not dip.

To launch the bot, they pressed the Copy button and allocated 100 USDT to it.

In the copy window there may be additional parameters, such as take-profit and stop-loss, at which the bot stops trading. We left the default settings.

Trading statistics of the copied bot appear in the My Strategies tab. In three days it earned $26.18 — 26% of the deposit.

We stopped the bot and took profits after deducting a 5% fee for the strategy’s author. We did not receive USDT, but SAND3L and MANA.

To exchange them, we went to the wallet and clicked Trade next to the token balances.

Gate.io does not support market orders in spot trading. Users have access only to limit orders and stop orders with exact execution prices.

This may seem inconvenient: you cannot sell tokens in one click; you must set an execution price and wait for the market to reach it. However, this design protects traders from slippage when filling market orders, and for fast trades you can issue a sell order below the market or a buy order above the market.

Single-Asset Vault: 0.6% in three days or 80% APR

Using the Single-Asset Vault tool, users provide liquidity for loan issuance.

Borrowing yield depends on the token’s popularity as a settlement asset and may change over time. Gate.io shows yields as a 7-day APY — the average yield over the last week.

All assets in the Single-Asset Vault have different minimum entry thresholds. For example, for eCash it is 1.8 million XEC ($220).

We deposited 30 TONCOIN ($130) into a pool with a 62% annual yield and kept liquidity for three days.

During this period our balance rose by 0.155 TONCOIN ($0.62). The instrument’s yield was about 60% per year.

We clicked Redeem to withdraw funds from the pool and swapped them for USDT in the wallet.

Lending USDT: 0.19% in ten days or 6.93% APR

Lending is the issuance of loans for margin trading for a term from 10 days to a month. To access the instrument, select Finance → Crypto Lending in the menu.

On the Lending page you can select tokens, view offers from other users and publish your own.

Borrowing yield depends on the popularity of the cryptocurrency as the settlement asset.

The highest yields come from loans in USDT: most coins are traded against this asset. They yield about 0.02% per day (7.3% per year) to users, while offers with Polkadot or Dogecoin are around 0.01% per day (3.6% per year). Additionally, lending in USDT protects lenders from losses due to price declines.

Gate.io charges a fee of 18% of lending profits. Taking this into account, the real APR for USDT lending is not 7.3% but 5.98% per year.

We published an offer to lend 100 USDT for 10 days at 6.93% per year. Traders took the funds in 10 minutes.

Track loan statistics at the bottom of the Crypto Lending page.

Earnings are shown in the Rate field: in 10 days we earned $0.19.

To have the exchange automatically issue loans, switch on Auto-Renew. When traders return funds, Gate.io will place them in the order book at the same rate.

Taking profits

To withdraw funds go to the Withdraw tab in the wallet. In the opened menu select the currency and blockchain, then enter the address and the withdrawal amount.

The exchange required a trading password, Google Authenticator code, and the email code, and then to confirm the correctness of the address and withdrawal amount.

We received USDT in six minutes. No KYC was required for withdrawal.

Conclusions

Gate.io supports 10 tools for passive earnings: from margin loans to trading bots.

In our test, the most profit came from copy trading — 26% of the deposit in three days, or 1,300% APR. The Single-Asset Vault and lending yielded 60% and 7.3% per year respectively.

However, even passive earnings carry risk: a strategy that performed well in the past may fail to work and could incur losses in the future. Remember this and do not invest more than you are prepared to lose.

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