<figure class="wp-block-image size-large"><img width="325px" height="183px" srcSet="https://d2ly46a6b1u3g6.cloudfront.net/wp-content/uploads/2023/08/17000343/smart-holders-1-375x211.webp 375w, https://d2ly46a6b1u3g6.cloudfront.net/wp-content/uploads/2023/08/17000343/smart-holders-1-662x372.webp 662w, https://d2ly46a6b1u3g6.cloudfront.net/wp-content/uploads/2023/08/17000343/smart-holders-1-768x432.webp 768w, https://d2ly46a6b1u3g6.cloudfront.net/wp-content/uploads/2023/08/17000343/smart-holders-1.webp 688w" sizes="(max-width: 425px) 150px, 450px" src="https://ll-blog-dev.s3.ap-southeast-2.amazonaws.com/wp-content/uploads/2023/08/17000343/smart-holders-1.webp" alt="smart holders" class="wp-image-3735"/></figure>



So you want to hold your PLS forever and #neversell. 



This would make you a holder.



But the question is, how do you become a “smart holder”? 



Most investors will agree that earning yield (as safely as possible) and minimizing tax burden is essential while holding.



Read on to learn how <a href="https://www.thecoinzone.com/blockchain/explained-liquid-loans-defi-protocol-on-pulsechain" target="_blank" rel="noreferrer noopener">Liquid Loans</a> allows holders of PLS to do just that.



<h2 class="wp-block-heading tablecontent">Smart Holders Earn Yield with Liquid Loans</h2>



<figure class="wp-block-image size-large"><img loading="lazy" width="325px" height="183px" srcSet="https://d2ly46a6b1u3g6.cloudfront.net/wp-content/uploads/2023/08/17000407/smart-holders-2-375x211.webp 375w, https://d2ly46a6b1u3g6.cloudfront.net/wp-content/uploads/2023/08/17000407/smart-holders-2-662x372.webp 662w, https://d2ly46a6b1u3g6.cloudfront.net/wp-content/uploads/2023/08/17000407/smart-holders-2-768x432.webp 768w, https://d2ly46a6b1u3g6.cloudfront.net/wp-content/uploads/2023/08/17000407/smart-holders-2.webp 688w" sizes="(max-width: 425px) 150px, 450px" src="https://ll-blog-dev.s3.ap-southeast-2.amazonaws.com/wp-content/uploads/2023/08/17000407/smart-holders-2.webp" alt="earn yield" class="wp-image-3736"/></figure>



Smart Holders want to maximize <a href="https://www.thecoinzone.com/tradfi/capital-efficiency-in-crypto" target="_blank" rel="noreferrer noopener">capital efficiency</a> and minimize <a href="https://www.thecoinzone.com/pulsechain/dormant-capital" target="_blank" rel="noreferrer noopener">dormant capital</a> while holding an investment long term.



Typically, they do this by finding safe ways to yield over the course of their holding term.



Currently there are two ways to earn yield on your PLS holdings:



<ol>
<li>Validating. <a href="https://www.thecoinzone.com/pulsechain/pulsechain-validators" target="_blank" rel="noreferrer noopener">PulseChain Validators</a> earn yield for securing the network. However, becoming a validator involves a lot of technical knowledge and considerable risks if done incorrectly.</li>



<li>Liquidity Providing. Holders of PLS can deposit their coins into <a href="https://www.thecoinzone.com/defi/liquidity-pools" target="_blank" rel="noreferrer noopener">liquidity pools</a> and earn fees as well as other rewards. However, doing this brings in the risk of <a href="https://www.thecoinzone.com/defi/impermanent-loss" target="_blank" rel="noreferrer noopener">impermanent loss</a> as well as possibly losing your PLS bag for the coin or token that you pair it to. </li>
</ol>



So, we need a third way to earn yield on your PLS without the risk of losing your PLS and without the need for technical know-how.



Liquid Loans allows smart holders of PLS to collateralize their coins and mint <a href="https://www.thecoinzone.com/liquidloans/usdl-crypto" target="_blank" rel="noreferrer noopener">USDL</a>.



This gives them several advantages:



<ol>
<li>Retaining PLS. Smart holders of <a href="https://www.thecoinzone.com/pulsechain/pls-accumulation-strategy/" data-wpil-monitor-id="1553">PLS can gain instant liquidity</a> without losing their PLS bags and possible upside potential. As long as their collateral ratio is sufficiently high and they have access to USDL to pay off their debt in the case of a market downturn, then they will not lose their PLS.</li>



<li>Yield Opportunities. Holders can take the <a href="https://www.thecoinzone.com/liquidloans/usdl-is-actually-a-store-of-value-but-only-if-you-mint-it-yourself/" data-wpil-monitor-id="1285">USDL that they minted</a> and find yield opportunities in a variety of different places. For example, they can deposit it into the <a href="https://www.thecoinzone.com/liquidloans/stability-pool" target="_blank" rel="noreferrer noopener">Stability Pool</a> and earn PLS and <a href="https://www.thecoinzone.com/pulsechain/loan-token-ultimate-guide" target="_blank" rel="noreferrer noopener">LOAN token</a>, or they can provide liquidity with their USDL on <a href="https://www.thecoinzone.com/pulsechain/pulsex-complete-guide" target="_blank" rel="noreferrer noopener">PulseX</a> or another DEX. </li>
</ol>



<h2 class="wp-block-heading tablecontent">Reducing Tax Burden with Liquid Loans</h2>



Smart holders know that when you sell an appreciating asset you pay <a href="https://www.thecoinzone.com/liquidloans/why-real-estate-investors-understand-ll/" data-wpil-monitor-id="794">capital gains tax</a> in most jurisdictions. 



If the value of your sale is high, this could be a significant taxable event. 



Therefore, smart holders find a way to access liquidity on their holdings without selling. 



Elon Musk did exactly this with his Tesla Shares. Instead of selling them, he took a loan on them and used that money to live off of. 



The <a href="https://www.thecoinzone.com/pulsechain/what-influences-the-price-and-supply-of-usdl/" data-wpil-monitor-id="1086">Liquid Loans protocol</a> allows users to do just this with their crypto. 



Users can collateralize their PLS and receive USDL as a lona.



This has several advantages:



<ol>
<li>Instant liquidity for further investing or spending.</li>



<li>Avoidance of a taxable event (Consult a Tax Attorney in Your Jurisdiction)</li>



<li>Not losing access to your PLS and its possible future price appreciation</li>



<li>0% interest</li>
</ol>



<h2 class="wp-block-heading tablecontent">The Bottom Line: Smart Holders use Liquid Loans</h2>



For those who plan to hold PLS for the long-run, learning how to be a smart holder is key.



Smart holders of PLS will find ways to earn yield while waiting, as well as avoiding paying capital gains tax from selling.



The <a href="https://www.thecoinzone.com/defi/protocol-owned-liquidity/" data-wpil-monitor-id="748">Liquid Loans protocol tackles both of these problems</a>.

PulseChain Contract Addresses: Complete Guide and Quick-Start FAQ

The Richard Heart Case Is Dead in the Water — And Crypto’s Sailing Free

A PulseChain (PLS) Accumulation Strategy Using Liquid Loans

PulseChain Gas Fees Explained (How Much Cheaper than Ethereum?

Smart Holders Will Use Liquid Loans: Here's Why

Click here to learn why smart holders will use <a href="https://www.thecoinzone.com/defi/defi-yield-protocol/" data-wpil-monitor-id="257">Liquid Loans</a> to optimize their PLS bags while waiting patiently.

Smart HODLERS Will Use <a href="https://www.thecoinzone.com/liquidloans/dont-dump-on-yourself-cash-out-with-liquid-loans/" data-wpil-monitor-id="981">Liquid Loans</a>: Here's Why