Experienced traders can earn thousands of dollars daily. Still, to do so, they need to know the current situation in the market, use tech analysis, and spend much time due to the need to monitor their portfolios constantly.
Not everyone can afford that, so for traders who plan long-term investments, there are many other methods to make money from digital assets. Let’s talk some more about that today.
Earn passive income in Crypto: is it possible?
Yes, it is possible to have a passive income with the help of cryptocurrencies. And the number of options makes it easy to choose something unique and most suitable for everyone.
However, it is worth understanding that the money will not just drop, and to start getting something, you will have to study the market and working strategies for your own research and investment goals.
But even in this case, you must understand that investing is always a risk, so you must take risks and have a competent and straightforward approach to investment goals.
You’re mistaken if you think you can figure it out in a few hours and choose a 100% successful option. The advantage is that it can be done with minimal investment.
The leading resource you have to spend is time. Specifically, the time to study:
- the market;
- the different strategies;
- how DeFi works;
- and reading forums on the subject;
- reliable and promising projects.
The internet is full of stories about how someone made a fortune and started earning passive income from crypto projects without much effort, so everyone wants to do the same. Let’s look at the most popular ways to make a while by earning passive income with crypto: Crypto is a source of earning passive income using cryptocurrencies.
Staking
Indeed, you have heard of this method of earning passive income from crypto income and interest from crypto games, as it is pretty popular on crypto exchanges. The earnings will depend on which digital asset you choose to earn interest. For example, some stablecoins bring about 0.15% a year by you start earning passive income from interest and passive income from regular interest payments. Others can give 5-6% or even more interest alone.
The principle is simple. The user gives his funds to decentralized exchanges in exchange for storage for a while or places them in a wallet, for which he receives a percentage.
This way of earning interest, passive income, and crypto investments suit investors and traders with average or low-risk tolerance and many cryptocurrency holdings in their accounts.
Also, some digital assets pay to the stake, and you can see ways to earn and generate passive income from crypto income safe interest-bearing digital asset assets or rewards in another related token. You keep the money, and the crypto lending platform rewards you. It’s safer that way because then you can control your funds.
Some offer bonus programs, i.e., the service takes control of your savings for a certain period and uses them for its own needs (margin, trading, transaction fees only, loans, etc.).
Technically, staking is made possible by the Proof-of-Stake consensus mechanism or its variants (Nominated Proof-of-Stake, Delegated Proof-of-Stake, and so on).
The system asks you to create a validator node and block a fixed minimum number of coins to secure, power the network, or transfer your savings to a specific nominator or validator.
Stackers receive a percentage mostly of the inflation of the fair market value of the digital asset deposited on the lending platform and the transaction fees generated by the peer-to-peer lending network.
Among the cryptocurrencies that give remuneration for staking, you can consider:
- Ethereum
- Solana
- Cardano
- Avalanche
- Polkadot
It’s worth keeping in mind that the percentage of staking is paid in the same cryptocurrency investing. That is, the income from SOL gives more SOL.
Thus, if the value of a coin fell at the time of staking, it is not excluded that it is possible to go down when converting to fiat currency unless the funds received during the staking will cover the difference.
Yield farming
This approach is similar to the previous one but a bit more complicated. The principle is that along with trading fees and storing funds on an exchange or wallet, the user gives part of the savings to a liquidity pool, which often includes combining multiple coin variants.
For example, mining Bitcoin and storing two tokens in a liquidity pool can result in a combined token that will generate huge profits. New, very volatile coins especially offer such liquidity pools an opportunity to earn interest.
They can go into farms’ liquidity pools and earn rewards with hundreds of percent annual interest, and other liquidity providers’ liquidity pools with 10-20 thousand yearly percentage yields earn interest.
The advantage is that the percentages accrue 24/7 and are usually in crypto tokens. The resulting coins can be re-pooled and added to the farm, allowing you to earn more immense rewards in the long run or withdraw into fiat if you wish to earn passive income from idle crypto assets only.
However, it is also riskier given competitive interest rates and the method allowing you to get more. This is because coins that provide such high-interest rates and commission income have a greater chance of dropping in value if the underlying digital asset collapses in value dramatically.
To avoid losing everything all at once, it’s not recommended for newcomers to the crypto industry to participate in pools with low liquidity.
Also, like any other digital network, DeFi can fall victim to hacks or simple mistakes. In addition, this method may require more attention, time, and effort from the user than average crypto passive income earning.
Cloud mining
It is one of the easiest ways to get passive income from crypto mines, which is suitable even for beginners. It does not require any in-depth knowledge or the purchase of expensive hardware/applications. Instead, the user borrows the power of particular companies that mine Crypto somewhere far away in remote data centers.
Cloud mining can be divided into:
- Host mining. In this case, a mining facility is rented.
- Hash leasing. Refers to renting/leasing the total capacity that a remote farm produces.
This passive income method allows for both passive income from the whole crypto space and some crypto passive income, safe and some passive income, crypto income from passive income, and safe and passive income strategy from crypto income from profits in bitcoins and other altcoins.
Compared to traditional mining, cloud mining has several advantages:
- there is no need to buy and set up any equipment;
- no technical or IT knowledge is needed;
- no electricity costs;
- generally higher profitability;
- you can mine different coins on the same platform.
To start, choose a legal platform and buy a suitable contract. Look only at proven sources that are related to the industry. Otherwise, there is a chance of running into scammers.
Crypto savings account
A working but relatively old way to make passive income from digital assets. It means opening a crypto-deposit or a crypto-savings account similar to financial products in traditional financial institutions.
The income from interest rates in such accounts is much higher than in regular banks. It is possible to choose a flexible or fixed term of storage.
Several experts advise storing coins for the long term. Thus, several companies promise 10-20% profitability from interest rates on interest-bearing accounts alone, which cannot be boasted of by usual banks.
However, it is essential to remember that such savings accounts only estimate their yield in digital crypto assets; the value constantly fluctuates, affecting annual income. In that case, experts recommend choosing offers on stablecoins that are more reliable, such as Dai (DAI) and USDC.
If you choose this way of getting passive income, it is worth paying attention to the conditions for withdrawal from the account. Fixed terms allow you to freeze your savings for a certain period and get a higher yield.
This strategy is suitable for those who plan to invest in the long term. Also, the method is considered relatively safe.
Crypto lending
The principle of operation is similar to opening a deposit in a regular bank; only the calculation is carried out in cryptocurrency — the investor credits exchanges, which increase liquidity, or ordinary users. The transferred money is frozen in a smart contract or contract.
For example, let’s take the Binance exchange. It has two types of the various various lending services or lending platforms. Centralized lending services or lending platforms are:
- Perpetual contract. There is a low-interest rate, but money can be withdrawn or deposited anytime.
- Fixed contract. It was created for ten days and characterized by a high interest rate. For USDT, it is 10%, and for Axie Infinity, it is 50%, but the invested money will be frozen for 15 days.
If you like it, go for it.
Affiliate programs
The bottom line is simple: the platform rewards partners who attract new customers to use the service — exceptional loyalty to those with many subscribers on social networks. You only need to be famous on the internet and declare your desire to cooperate with the platform as a partner.
Airdrops and forks
Cryptocurrencies number in the thousands, and there are more and more of them. Newcomers in the market now and then want to make themselves known, and one of the most common ways is to distribute their coins to profitable market participants and those who like their approach and technology.
However, finding out which project has just recently opened will not be easy; you must thoroughly research to know who has just appeared.
Look for affiliate programs, some offering cryptocurrency rewards. These exchanges either block rewards or have ways to earn passive rewards or ways to either have ways to earn rewards or passive rewards or ways to earn passive rewards that reward users for bringing in new clients.
Forks are an offshoot of the leading coin. In this case, the token’s creators reward the user with forks for using the main product.
Airdrops usually happen after someone launches a new digital asset; forks are needed to get market participants to appreciate the new product.
Such a strategy can bring in revenue, but not immediately or not at all. The upside is that the user gets the coins for free, but they have no value until there is interest in them.
The company’s task is to introduce its product to the market and make it known. The more people know about the coin, the more likely it will be bought, the market capitalization will grow, and the value of the currency, and therefore, your income.
In 2017, BTC holders received the so-called bitcoin bash, a fork of the leading coin. In 2021, KeepKey wallet customers were rewarded with ShapeShift. All users who logged in at a particular time received tokens. You must follow the requirements and get the reward to get something as part of the airdrop.
It’s like getting a discount coupon or a sample of some product for free. Customers don’t spend money but tell the masses about the new product. But, if everyone likes the coin and becomes famous, it will be considered that the participant in the airdrop got the money for free.
To promote projects, token creators turn to affiliate programs such as Crypto, which helps companies increase sales, trade, and customer base. Look for a program with good commissions and a good reputation.
Chances are higher that you will be partnered with if you have a large audience potentially wanting to try the new product.
Dividend-earning tokens
A way of generating passive income, in which the user is paid for supporting the development of the business. Payment is made in tokens with different functions.
It may seem that this strategy is similar to staking, but it is not; in the case of staking, a market participant invests in a coin and waits for its value to increase; in this case, the user receives dividends in cryptocurrency.
Look for companies that pay well. Some pay more, so do your thorough research first. For example, some companies give loyal individuals up to 30% per year in dividends, depending on the investment size.
It’s also worth noting that many digital assets promise to either generate passive income or top-earning crypto income; Crypto generates passive income, and Crypto can generate passive income. In exchange for dividend-earning tokens, users offer their financial support.
Profits can come from increased coin value dividend earnings to earn passive income or earning passive crypto income from tokens or investment privileges.
Such a strategy is more like owning shares in a company. The dividends received depend on the company’s profits and participants’ contributions.
Passive income generation with Crypto: pros & cons
Pros:
- Some strategies are straightforward. Users need to deposit stablecoins and start making profits.
- Investors can set aside an increase in funds. That is, not to sell coins that have increased in value but to keep and use them to make a profit. And while such income would be taxable, it would be more convenient than selling many coins outright.
Cons:
- Most strategies imply that the user is willing to take risks. Sometimes, even 100% of their money. The reason could be a hack, a smart contract error, a platform bankruptcy, or anything else.
- Difficult navigation (sometimes). The world of DeFi can be technically complex. For example, it will require setting up a wallet or learning decentralized finance protocols. Newbies will have to spend some time on this.
As we learned, digital assets offer many ways to make passive income. The choice depends on your preferences, how much time you are willing to spend on it, and your technical analysis level. Whether or not you’re ready to take a risk can also play a decisive role.
However, it makes no difference whether you’re a beginner, expert investor, or financial advisor; you can learn everything, as all methods work. Just find the one that works best for you.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
