7 Ways to Earn a Passive Income with Crypto

Cryptocurrencies, like other investments, offer investors the chance to earn a passive income. Initially, crypto investors didn’t have a huge choice of ways to earn a passive income. HODLers who entered the game early and persevered by holding onto their digital currencies; were rewarded with crypto value growth. Others were more daring – they watched the crypto markets and repeatedly bought in low and sold higher in a repeated cycle – making good returns.

Today, there are several ways to earn crypto from a passive income with your cryptocurrencies.

Image Credit: Hodlnaut

• Earn Interest on Your Cryptos

Companies have recently developed interest-earning accounts allowing you to generate a passive income with your cryptocurrencies.  From a yield of up to 7.5% on BTC, users can earn crypto interest of up to 12.7% on crypto assets with Holdnaut’s tiering system. All you must do is deposit your cryptos with them and you start to earn crypto interest from the first week in your Holdnaut Wallet.

You can get paid in the asset of your choice, swap tokens, and execute trades between available asset pairs on the Holdnaut app. There is no minimum amount required for opening a Hodlnaut Interest Account. Cryptocurrencies supported are BTC, ETH, DAI, USDC, USDT, and WBTC, and you can withdraw anytime at a competitive withdrawal fee.

• Staking into Crypto Projects

A popular alternative to expensive mining to earn free crypto is proof of stake. If you own cryptocurrencies that operate on proof-of-stake, you have the option of staking your coins by lending them to the network to validate transactions. In exchange, the network rewards you with additional coins as a crypto interest.

Like lending cash, staked coins are deposited into a special pool and available for spending. You can only validate your staked tokens, and the more you stake, the more you can validate transactions, earning yourself more tokens. Pools of combined coins have a larger portion in the transaction, making them more profitable. Networks usually require a minimum investment.

• Airdrops, forks and buybacks

“Airdrop” refers to the widespread distribution of cryptocurrency, offering a windfall based on the amount of current holdings. When a fork happens on blockchain an investor receives proportional holdings on the new fork (it should be noted here that forks are not a stable source of passive income). In the lingo, “buybacks” mean a cryptocurrency is bought to be destroyed afterwards. These three options can help to increase earnings in a short time, but rely more on luck and offer little certainty in an already volatile market.

• Crypto Cloud Mining

With cloud mining, you rent digital currency mining hardware at specialized mining farms and receive regular cryptocurrency mining income. This means you don’t have the expense of maintaining your own mining hardware, but you pay a daily maintenance fee to the operator.  Cloud mining is a long-term investment that also carries a risk if the value of the digital coin drops below a point worth mining. There have also been a few scams in this area, so thorough research is required.

• Smart contracts and DeFi Lending

DeFi lending is powered by smart contracts enabled by blockchain technology and its financial applications. These functions have no administration or third-party intervention, unlike on other lending platforms. DeFi lending requires no permission, is transparent, and is open-source. You list your crypto coins on platforms for lending purposes where borrowers have access and pay you interest.  DeFi lending has a higher-than-average annual percentage yield (APY) making it popular, but is also not risk-free, so look for established platforms.  

• Dividend Tokens

This is one of the easiest ways to earn a passive income in the crypto markets. You buy and hold dividend tokens from digital asset exchanges. These exchange-issued tokens are staked on an external wallet, and depending on the exchange, you have discounts on trading fees and could earn shares from the platform profits.

• Yield Farming

Yield farming also allows its users to earn passive income in the decentralized finance (DeFi) markets. You deposit the digital assets in a pool (trading or lending) and stake the protocol’s token to earn crypto interest based on a liquidity pool. Yield farming is complex and carries risks, but investors have seen excellent returns. This is not for you if you are looking for low-risk crypto investments.

Last words

Most of these crypto investments carry various risk levels, some small and others bigger. However, they all offer you passive income opportunities. Whatever you decide is the best way to invest your crypto holdings, take the time to research and familiarize yourself with the various terms, concepts, and investments before plunging in. For those who would like to earn passively it may be worth investigating platforms like Hodlnaut which allows users to simply deposit their crypto while earning up to 12.73% APY.