Today, I’ll show you 6 ways to earn passive income in crypto.
Crypto trading is fun especially when you are making more profits than losses.
However, waiting on signals and following market trends can be exhausting.
As a means of support, traders hodl coins that they do not have an immediate need for.
Eventually, these coins may or may not increase in value. Whatever the outcome, the trader has nothing to lose.
But that’s not all you can do.
Keep reading to learn other ways that you can earn passive crypto income.
6 Ways To Earn Passive Crypto Income
Find more details on each option below…
1. Centralized Crypto Lending
The first way to earn passive crypto income is via centralized platforms that provide lending services.
They hold deposited crypto and then lend it out to generate interest.
To earn from these platforms, you are required to create an account and deposit funds into your wallet.
Impressively, these platforms support a long list of cryptocurrencies.
Hence, you can deposit all the coins you can afford to.
As the platform lends out your funds, it compounds interest for you daily.
This is an easy way to earn on your holding because the loans are heavily collateralized.
In other words, the borrowers take loans that are lesser than what they will pay back.
Furthermore, you do not need to tie up your crypto in the platform for a long period.
And as such, you always have access to your funds.
However, they are centralized platforms meaning that you do not have absolute control over your funds.
Therefore, you must ensure that a platform is 100% legit before depositing your funds there.
The top platforms you can opt for are Celsius Network, BlockFi, and Nexo.
Check out how much you can earn from these platforms in this post – 11 Crypto Wallets That Pay Huge!
Pros
- High interest rates
- Supports many currencies
- No need to lock up your funds
Cons
- You don’t have absolute control of your funds
- KYC is required
2. DeFi Lending
Secondly, on my list of how to earn passive crypto income is DeFi Lending.
DeFi is hot these days and it feels good to know that you can earn passively from this space.
Here, we’re looking at trustless/permissionless peer-to-peer borrowing.
Unlike what we saw earlier, where the centralized platform merges borrowers and lenders, we have a set of smart contracts.
The smart contracts are written to adapt interest rates based on the supply and demand of the coins available on the platform.
All you need to do is to connect your web-based wallet (e.g. MetaMask) and deposit funds.
Gratefully, you are in total control of your keys and there is no restriction to the interests that you earn.
As the platform accrues interests (which happens on a regular basis), your earnings are sent to your wallet.
Also, you don’t have to lock up your funds to earn.
To make the most of this service, it is advisable to opt for platforms with high TVL (Total Value Locked).
You will find them on defipulse.com. On this channel, you can also view the lending rates of different platforms.
That way, you can know how much interest you will receive for your deposits.
Top platforms that offer DeFi lending are AAVE, Compound, and MAKER.
Pros
- No KYC
- You’re in control of your keys
Cons
- It incurs Gas or network fees
- No regulator can help you recover lost funds
3. Liquidity Mining
Liquidity mining is the process of supplying liquidity to a protocol, which is then used to facilitate the decentralized exchange of different assets.
It is another way to earn passive crypto income.
Supplying liquidity to the protocol makes you a liquidity provider.
You supply liquidity by depositing your coins in a preferred pool available on a liquidity mining protocol or an AMM (Automated Market Maker).
Each pool consists of a pair of tokens that are added in proportionate amounts.
When traders swap these tokens, they pay transaction fees.
A percentage of these transaction fees are given to liquidity providers as rewards.
Additionally, these platforms give liquidity providers incentives in form of governance tokens. Cool, right?
The top platforms that offer liquidity mining services are Uniswap, Balancer, SushiSwap, 1inch, etc.
Pros
- Dual earnings – transaction fees and LP tokens
Cons
- Threat of impermanent loss
4. Yield Farming
Here is another way to earn passive crypto income.
Yield farming simply means maximizing the rate of return on capital by leveraging different DeFi protocols.
It combines lending and liquidity mining services to get the best yield.
We’re looking at hundreds to thousands of percentage yields. Super!
But it doesn’t come easy. You’ll have to move between several strategies to find the highest yield.
Talk about moving funds from lending platforms to liquidity mining protocols and back.
It is very rewarding but also exhausting. Honestly, it is not a game for newbies.?
Gladly, some platforms make the job easier by automating the entire process.
A good example is Yearn.Finance. Here, all you need to do is to connect your wallet and supply liquidity.
Yearn carries out the yield farming techniques behind the scene and sends your earnings to your wallet.
Note that the movement of funds across the platform poses a smart contract risk that can lead to loss.
Yearn takes care of this risk with its ‘Cover’ feature, which provides crypto insurance.
We have a post on Yield Farming that will teach you more. Click here to read it.
Pros
- High yield rates
Cons
- Smart contract risk
5. Staking
Staking is a popular term in crypto. And it is an easy way to earn passive crypto income.
PoS blockchains require users to stake their coins in order to maintain decentralized consensus.
This consensus helps the blockchain to function effectively.
Users are rewarded for staking their coins. The rewards differ based on the coin.
So, it is best to go for a coin that you are bullish about.
You want to consider the wallet supported, staking complexity, payout terms, lockup periods, and staking rewards.
To stake rewards, you can go to an exchange that supports the feature.
For example, Binance supports about 46 coins that you can stake.
These exchanges serve as validators for PoS blockchains.
Your stake increases their voting power to influence governance tokens.
Alternatively, you can code-stake your coin if you own a hardware wallet.
That way, your coin is safe offline and also staked.
Unlike what we have seen so far, in staking, you will have to lock up funds for a period of time to earn.
Coins with high staking rewards include ADA, DOT, ATOM, etc.
Pros
- You help secure the network
- Rewards are given in your favorite coin
Cons
- Requires locking up funds
6. Cryptocurrency ETFs
Lastly on how to earn passive crypto income is Cryptocurrency ETFs
ETF stands for Exchange Traded Fund. It is a type of security that tracks an index, commodity, or other assets, which can be bought or sold on a stock exchange.
Cryptocurrency ETFs work the same way as the regular ETF; only that the asset here is cryptocurrency.
It may represent a single cryptocurrency or a basket of different digital tokens and currencies.
This is an easy way to earn from a coin even when you have limited funds.
All you need to do is to buy a share of its ETF and start earning dividends.
Interestingly, your dividend increases as the value of the coin increases.
You can learn more about ETFs here.
A good example of a coin that has an ETF is 10SET.
Tenset (10SET) is an ETF2.0 project based on Ethereum.
It rewards holders with high and stable ROI. You only need to hold 10 Tenset to start earning.
Trust me, you want to grab this opportunity as the coin is doing well in the market.
10SET increased by 500% barely 7 days after its listing on Uniswap. Super!
You can read our post on ‘How To Buy 10SET’ to learn more.
Pros
- Cost effective
- Reduced risk of loss
- Tracks multiple digital tokens at once
Cons
- Poor liquidity may hinder transactions
Take Away!
While trying out the earning options listed above, beware of scam projects.
They can come in the form of:
- Investment/Trading Scheme – where a supposed expert trades on your behalf
- Cloud mining – you buy harsh power and earn mining rewards
- Crypto lending – you earn from those borrowing from the platform.
Most times, these scam projects appear authentic so, you must conduct diligent research before investing in anyone.
Common red flags are when the returns look too good to be true and when the project employs MLM tactics.
You will find more guidelines from our post on DeFi Scam Alert.
B.T.W
If you want to learn how to trade cryptocurrencies profitably, we have created a perfect course to help you do that.
Enroll in our Cryptocurrency Mastery Course by going to www.ctmastery.com.
You can also join our Telegram community at https://t.me/ctmastery for more information.
Conclusion
We have now come to the end of our discussion on ‘how to earn passive crypto income.’ I hope you enjoyed the read.
Now tell me, which option from my list will you try first and why?
Are there other options you feel should have made my list?
Tell me in the comments section right now.
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