Level 1: Just holding tokens in your wallet
The simplest thing you can do with crypto is hold it. You buy some ETH, SOL, or BTC, and it sits in your wallet. You're not earning anything on it, but you're not taking any extra risk either. Its value goes up and down with the market.
This is like keeping cash in a safe at home. It's yours, no one else can touch it, but it's not working for you.
What you own: The tokens themselves — ETH, BTC, SOL, USDC, or any other cryptocurrency.
Risks: Market price changes. If you hold ETH and its price drops 20%, your holdings are worth 20% less. Stablecoins like USDC are designed to avoid this, staying close to $1.
In CleanSky, this appears as "Holdings" — simple, straightforward. You own it, it's in your wallet, that's it.
Level 1b: NFTs and collectibles
NFTs (Non-Fungible Tokens) are unique digital items — art, music, game items, membership passes, domain names, or certificates. Unlike regular tokens where each unit is identical (one ETH is the same as any other ETH), each NFT is one-of-a-kind.
How they work: An NFT is a token on a blockchain that points to a specific piece of content. Owning the NFT means the blockchain records you as the owner. You can sell it, transfer it, or keep it in your wallet.
Common types:
- Profile picture collections (PFPs) — CryptoPunks, Bored Ape Yacht Club, Pudgy Penguins
- Digital art — One-of-one pieces or limited editions by artists
- Game items — Characters, weapons, land in blockchain games
- Membership passes — Access to communities, events, or services
- Domain names — ENS names (.eth), SNS names (.sol)
Risks: NFT prices are highly speculative and can be extremely volatile. Many NFTs lose most of their value over time. Liquidity is very low — there might not be a buyer when you want to sell. Unlike a token you can sell on a decentralized exchange instantly, selling an NFT requires finding someone who wants that specific item.
Level 2: Savings — Depositing to earn interest
The first step beyond holding is putting your tokens to work. Lending services let you deposit your tokens, which are then lent to borrowers. In return, you earn interest — just like a bank savings account.
How it works: You deposit tokens (for example, USDC or ETH) into a lending service. Borrowers pay interest to use those tokens. You earn a share of that interest. You can usually withdraw your deposit at any time — there's no lock-up period.
Typical returns: 2%–8% per year, depending on the token and market demand. These rates change constantly based on supply and demand — when many people want to borrow, rates go up.
Risks: The lending service could have a bug or be hacked. There's no deposit insurance like banks have. The interest rate can drop to near-zero during low-demand periods.
In CleanSky, this appears as "Savings" — money deposited somewhere, earning interest, that you can take back.
Services: Aave, Compound, Morpho, SparkLend, Venus, Kamino, Solend, Marginfi, Radiant, Silo — across Ethereum, Solana, BNB Chain, Arbitrum, Base, Optimism, Polygon, and more.
Level 3: Staking — Helping the network, earning rewards
Staking means committing your tokens to help a blockchain network operate securely. In return, the network pays you rewards — similar to interest, but from the network itself rather than from borrowers.
How it works: You lock your tokens (like ETH or SOL) with the network directly, or through a staking service. Your tokens help validate transactions on the network — like voting that transactions are legitimate.
Two flavors of staking
Direct staking
Your tokens are locked and can't be used for anything else during the staking period. You get them back when you "unstake," which might take days or weeks. Simple and secure.
Liquid staking
A service stakes your tokens and gives you a receipt token (like stETH for ETH, or JitoSOL for SOL). This receipt token earns rewards automatically, and you can still trade it, sell it, or use it in other DeFi services.
Typical returns: 3%–7% per year for major networks like Ethereum and Solana.
Risks: With direct staking, your tokens are illiquid during the unstaking period. With liquid staking, you're also trusting the staking service's smart contract. If the service has a vulnerability, your staked tokens could be at risk.
In CleanSky, this appears as "Time-locked savings" — your money is committed to earn rewards, though with liquid staking you can still access its value through the receipt token.
Services: Lido (stETH), Rocket Pool (rETH), Jito (JitoSOL), Marinade (mSOL), ether.fi (eETH), Stader, Sanctum, Mantle, Binance staked ETH, and many more.
Level 4: Liquidity pools — Providing tokens for trading
This is where things start getting more involved. Decentralized exchanges (like Uniswap or Raydium) need pools of tokens so that people can trade. You can provide those tokens and earn fees from every trade.
How it works: You deposit a pair of tokens (for example, ETH and USDC) into a pool. When someone swaps ETH for USDC (or vice versa), you earn a small fee from that trade — typically 0.01% to 0.3%. The more trading volume, the more you earn.
The tradeoff — impermanent loss: When you provide liquidity, the pool rebalances your tokens as prices change. If ETH's price doubles, the pool sells some of your ETH for USDC to maintain balance. You end up with more USDC and less ETH than you started with. Compared to simply holding both tokens, you might have less total value — this difference is called impermanent loss.
Impermanent loss is "impermanent" because if prices return to where they started, the loss disappears. But if they don't, the loss becomes very real.
Risks: Impermanent loss, smart contract risk, and the possibility that trading fees don't compensate for the price change. This is an active position that requires monitoring.
In CleanSky, this appears as "Active investment" — because unlike savings or staking, liquidity provision carries impermanent loss risk and benefits from active management.
Services: Uniswap, Curve, Raydium, Orca, PancakeSwap, Balancer, Aerodrome, Velodrome, Camelot — across Ethereum, Solana, Arbitrum, Base, Optimism, BNB Chain, and Polygon.
Level 5: Vaults — Automated strategies
Vaults take the complexity out of DeFi by automating investment strategies for you. You deposit tokens, and the vault's code handles everything — choosing where to invest, harvesting rewards, reinvesting them, and optimizing for the best returns.
How it works: Think of it like a managed fund, but run by code instead of a fund manager. You deposit your tokens, the vault executes a predefined strategy 24/7, and your balance grows as rewards are automatically reinvested. This automatic reinvestment is called auto-compounding.
What's inside a vault? It depends on the strategy. Some vaults simply deposit your tokens into the best lending service. Others combine lending with liquidity provision. Some use more complex multi-step strategies across several services.
Risks: You're trusting the vault's code and strategy. If the underlying services the vault uses have problems, your deposit is affected. The more complex the strategy, the more things can go wrong. Also, some vaults charge performance fees.
In CleanSky, this appears as "Investment fund" — your money managed by an automated strategy, similar to a traditional managed fund.
Services: Yearn, Beefy, Convex, Pendle, Sommelier, Veda — across Ethereum, Arbitrum, and other networks.
Level 6: Loans — Borrowing against your crypto
You can borrow crypto or stablecoins by putting up other crypto as collateral — without selling it. This is useful if you need cash but don't want to sell an asset you think will go up in value.
How it works: You deposit collateral (for example, $10,000 worth of ETH) and borrow another token (for example, $5,000 in USDC). You pay interest on what you borrow. The reason you need to deposit more than you borrow is a safety buffer — if your collateral drops in value, there's still enough to cover the loan.
Liquidation: when the safety buffer runs out
If the value of your collateral drops too much, the service automatically sells some of it to repay part of your loan. This is called liquidation. There's no phone call from a banker — it happens instantly, automatically.
Services measure your loan's safety with a health factor: a number that shows how far you are from liquidation. Above 1.5 is generally safe. Below 1.0, liquidation starts.
Risks: Liquidation if your collateral drops in value. Interest accrues on your loan. Smart contract risk. Unlike a bank, there's no negotiating or grace period.
In CleanSky, this appears as "Loan" — showing your borrowed amount, collateral, interest rate, and a visual bar that makes it easy to see how safe your loan is, without needing to understand health factor math.
Services: Aave, Compound, Morpho, SparkLend, Venus, Kamino, Solend, Marginfi — the same services that offer savings also offer borrowing.
Level 7: Leveraged trading — Amplified bets
The most complex and risky type of position. Leveraged trading lets you trade with more money than you have by borrowing from the platform. Your gains are multiplied — but so are your losses.
How it works: You deposit collateral and open a trade with leverage. "Long ETH with 5x leverage" means: if ETH goes up 10%, you gain 50%. But if ETH drops 20%, you lose everything. Your position is automatically closed (liquidated) and your collateral is gone.
Key concepts:
- Long — You're betting the price will go up
- Short — You're betting the price will go down
- Leverage multiplier (2x, 5x, 10x, etc.) — How much your gains and losses are amplified
- Liquidation price — The price at which you lose everything
- Funding rate — A periodic fee paid between longs and shorts to keep prices aligned with the market
Risks: You can lose your entire deposit. Liquidation is instant and automatic. The higher the leverage, the smaller the price move needed to wipe you out. This is not investing — it's speculating.
In CleanSky, this appears as "Leveraged operation" — clearly marked as high-risk, with your current profit/loss and liquidation distance visible at a glance.
Services: Hyperliquid, GMX, dYdX, Jupiter Perp, Drift, Vertex — on specialized trading networks.
Other things to know about
Stablecoins that earn yield
Some stablecoins automatically earn interest just by sitting in your wallet. You don't need to deposit them anywhere — the token itself grows in value. For example, sDAI earns the MakerDAO savings rate, and sUSDe earns yield from Ethena's strategy. For a deeper dive, see our stablecoin guide.
Real-world assets on the blockchain
Tokens like OUSG (Ondo) represent shares in US Treasury bonds. PAXG represents physical gold. These bring traditional finance yields into crypto wallets. Learn more in our token types guide.
Token permissions
Every time you use a DeFi service, you usually give it permission to move a specific token on your behalf. These permissions persist even after you stop using the service. If the service is later compromised, attackers could use that old permission to access your tokens.
Periodically reviewing and revoking permissions you no longer need is important security hygiene. Learn more in our security guide.
In CleanSky, permissions appear in the Security tab — showing which services can access which tokens, so you can clean up anything you've forgotten about.
From simple to complex: a summary
| Level | What it is | Earns? | Risk level | In CleanSky |
|---|---|---|---|---|
| 1 | Holding tokens in your wallet | No | Market price only | Holdings |
| 1b | NFTs and collectibles | No | Very volatile, low liquidity | Holdings |
| 2 | Savings (lending deposits) | 2%–8% APY | Low (smart contract risk) | Savings |
| 3 | Staking | 3%–7% APY | Low-Medium | Time-locked savings |
| 4 | Liquidity pools | Fees + rewards | Medium (impermanent loss) | Active investment |
| 5 | Vaults | Variable | Medium (strategy risk) | Investment fund |
| 6 | Loans | No (you pay interest) | Medium-High (liquidation) | Loan |
| 7 | Leveraged trading | If your bet is right | Very High (total loss possible) | Leveraged operation |
CleanSky detects all of these automatically. Paste any wallet address and we find your holdings, savings, staking, investments, loans, and leveraged positions — across 484+ services and 34+ networks. Try it now.