Are you interested in earning income using cryptocurrencies? The crypto industry offers so many opportunities for earning income, ranging from investing to trading crypto assets. These require effort and some knowledge to do though.
Trading for example requires years of learning to be able to trade profitably. This usually comes with losses in the process of learning, and can be costly. Investing also requires being able to assess the crypto market and know which assets to buy.
An alternative is to invest through an asset management platform such as Grayscale that helps you to manage the assets. The downside is that you’ll have to pay the platform for its services. But what if you can earn passive income without having to go through any of that?
Passive income is income that doesn’t need any continued effort on your part. This makes it ideal for anyone with any level of crypto knowledge. If you’re someone with no knowledge or time to manage assets, this will work well for you. The following are five ways you can earn passive income with your crypto assets.
Crypto Lending
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Just like a fixed deposit account, there are platforms that offer yields on crypto assets you deposit with them. They’ll pay you a percentage interest for any crypto assets you deposit with them for a period of time.
This does not involve any effort once you make the deposit. There are many such platforms, the most popular of which are Nexo, BlockFi, and Crypto.com. They use your deposited funds to offer loans to borrowers who then pay back with interest that is in turn used to reward you.
Provide Liquidity
Decentralized finance (DeFi) has come with so many opportunities to earn, and providing liquidity is one of the most well known. This is a highly valued service by decentralized exchanges, so they are willing to reward you to render it.
Decentralized exchanges do not use order books to fill orders. Instead, they use liquidity pools, and guess who provides liquidity for the pools – liquidity providers! This is done on special decentralized exchanges known as automated market makers (AMMs).
Traders pay transaction fees whenever they use such platforms to swap tokens, and the fees are used to reward liquidity providers like you. Examples of platforms you can use are Uniswap, PancakeSwap, Pangolin, WagyuSwap, and SushiSwap.
Yield Farming
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Yield farming is another method of earning passive income that DeFi offers. It is an extra avenue if you’re already a liquidity provider. There are platforms that offer the opportunity to earn additional yield on the liquidity assets you provide.
These are called liquidity farms, and you’ll need to stake the Liquidity Provider (LP) Tokens you earn from providing liquidity, to a farm to start earning. After staking the LP tokens, you’ll earn a percentage of the rewards the pool pays daily, weekly, or monthly.
Crypto Staking
This may sound similar to yield farming, but they are two different processes. Crypto staking involves staking a particular crypto asset to contribute towards securing a crypto network. This typically works with proof of stake blockchains like Ethereum.
If you own a minimum of 32 ETH, you can stake them and become a validator for the Ethereum network, that is you help to validate transactions on the network. In return, you’re then rewarded with more ETH for staking and helping to secure the network.
Holding Yield-bearing Tokens
Yield-bearing tokens are tokens that give holders a share of the profits generated by the token issuer. There are many types of yield-bearing tokens and they operate differently.
Examples of yield-bearing tokens are Kucoin Shares (KCS) and AscendEx (BTMX), that pay a fraction of their trading fee revenue to token holders, as well as Nexo (NEXO) which entitles the holder to a fraction of its profits.
Some of these tokens also qualify holders for dividends which are periodically sent to their wallets as airdrops. However, the returns depend on the performance of the underlying platform.
Disclaimer: Avantage Cryptocurrency is not liable for any financial losses arising from the information available on our website. Read our disclaimer to learn more. The views and ropinions shared on our blog represent the perspectives of the individual authors only. Engaging in crypto trading carries inherent risks and might not be appropriate for every investor. Before delving into online trading, visitors should verify the legal status of such activities within their local jurisdiction. All logos, images, and trademarks showcased on this website are the property of their respective owners, used in accordance with the Fair Use act. Some of the posts (not all) on this site such as posts in the Avantage Cable category are promotional paid posts not written by our authors.
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