How to make passive income with crypto?
Passive income offers ongoing financial benefits, including stability, increased freedom, accelerated financial goals, and wealth accumulation without active effort. However, it’s not without risks, especially in crypto during market downturns.
Despite this, many traders leverage their crypto investments for optimized portfolio earnings.
Explore various passive income options in crypto, whether aiming for high returns, portfolio diversification, convenience, or involvement in DeFi and Web3.
Crypto Staking
Cryptocurrencies, like Ethereum, offer staking for passive income. Staking validates transactions and secures networks.
To stake, you need coins and a staking node. The node validates transactions and earns rewards.
Ethereum requires 32 ETH for full participation. You can stake less with pooled staking or exchanges.
Centralized exchanges like Binance offer easy staking but have risks. Staking requirements and rewards vary by cryptocurrency.
Cryptocurrency Masternodes
Masternodes are key in blockchain networks. They’re servers with real-time copies of the blockchain. They validate transactions and enable features. Masternodes improve scalability, decentralization, and privacy.
You can earn passive income through masternodes. Requirements include holding tokens and meeting technical specs. For instance, DASH masternodes need 1000 DASH units.
Compensation for running masternodes comes from block rewards. DASH masternodes offer around 10% annual returns. Yet, there’s risk due to fluctuating token value and network responsibility.
Crypto Marketplaces
Copy trading is a feature offered by many online trading platforms, allowing users to automatically copy the trades of other successful traders. By using copy trading, you can earn passive income by following the trades of experienced traders without having to actively manage your own investments.
To use copy trading, you’ll need to open an account with a trading platform that offers the feature. You can then browse the platform’s directory of traders and select the ones they want to follow. The platform’s software will automatically copy the trades of your selected traders into your account.
Unlike the vast majority of other trading platforms, Trality’s Marketplace is a one-of-a-kind space that brings together crypto trading bot creators and investors for mutually beneficial purposes. While most platforms rely exclusively on anonymous bot makers and unproven bots, Trality’s Marketplace is a carefully curated space with hand-picked creators and the best bots available, enabling both creators and investors to earn solid passive income returns.
Access bots that outperform the market
Investors can rent profitable bots tailored to specific risk tolerances (low, medium, and high) and individual investment goals. A full suite of metrics is available, allowing investors to decide on a bot based on clear, quantifiable data. Bot Creators can monetize their bots and earn passive income from investors around the world by having their bots listed on Trality’s Marketplace.
Cryptocurrency Lending
Crypto lending has hit headlines for all the wrong reasons. Recent debacles at Celsius, Gemini, and Genesis highlight this. A Bloomberg article calls the crypto lending space “a dumpster fire.” Bad press aside, what’s crypto lending? It’s like any other lending, really.
Crypto lending means lending crypto for interest. Options include centralized platforms, decentralized protocols, and peer-to-peer lending.
Centralized platforms, like Binance, handle the loan process. They deposit crypto and the platform loans it out.
Decentralized protocols, like AAVE, use smart contracts on blockchains. Lenders deposit crypto into a contract, which issues loans.
Peer-to-peer lending involves direct agreements between lenders and borrowers. Platforms like Nexo facilitate this.
But beware. Crypto lending carries risks. Consider interest rates, loan terms, collateral, and platform stability when choosing.
Cryptocurrency Dividends
If you know stocks, you know dividends. They give you cash or more stock. This means regular income and stock value growth.
Crypto is different but similar. Some projects share profits with token holders. You can earn crypto dividends, like extra cryptocurrency.
Crypto dividends come from projects that share profits with token holders. VeChain is one example.
VeChain is a smart contract platform. It solves data problems for many industries.
VET is VeChain’s token. Holders get VTHOR as dividends. Atomic Wallet helps with this, giving around a 2.2% return.
Crypto dividends aren’t exactly like stock dividends. They’re rewards, but work similarly.
Cryptocurrency Airdrops and Hard Forks
Cryptocurrency airdrops are like manna from heaven, offering financial support in lean times like the ongoing crypto winter.
They distribute tokens widely, often to promote new cryptos, reward users, or raise awareness.
Some projects even give free tokens to holders of specific cryptocurrencies to gain attention.
To get an airdrop, you must meet certain criteria, like holding a particular crypto or joining social media campaigns. Instructions are usually on the crypto’s website or social channels.
Hard forks are another way to earn passive income. When a hard fork occurs, a new crypto is created. If you hold the original crypto in a compatible wallet, you’ll usually get an equivalent amount of the new crypto.
BTC (2017) and Ethereum (2016) had notable hard forks. For instance, if you had 1 bitcoin (BTC) during the Bitcoin Cash (BCH) fork, you’d receive 1 BCH.
You could hold onto these coins and sell them later for profit, earning passive income.
Read more: What is a Private Key in crypto?
Yield Farming and Liquidity Mining
Yield farming is a way for cryptocurrency users to earn rewards by providing liquidity to a decentralized finance (DeFi) platform. These rewards can take a number of forms, such as interest, fees, or tokens.
In order to take part in yield farming, you need to deposit your crypto into a DeFi platform, e.g., as a decentralized exchange (DEX) or a lending protocol. Your crypto will then be used to provide liquidity to the platform, meaning that it can be used to trades and/or loans for others. As a “thank you,” you’ll earn a share of the fees or interest generated by the platform.
Yield farming and liquidity mining are often used interchangeably to refer to the above-mentioned process of earning rewards by providing liquidity to a decentralized finance (DeFi) platform. However, some people use the term “yield farming” to refer specifically to the process of earning rewards through complex strategies that involve borrowing, lending, and trading on multiple platforms.
Conversely, liquidity mining is a more general term that refers to the process of earning rewards by providing liquidity to a DeFi platform, regardless of the specific strategy used.
Final Thoughts
How to make passive income with crypto? Generating passive income through various crypto investments is a low-effort method to build wealth. Consider factors like entry costs and risks associated with different streams, such as running a DASH masternode. Opting for a trusted marketplace with clear metrics is one of the safest ways for both investors and creators to earn passively. Win-win: creators offer profitable bots, investors rent them.