When the leading investors around the world write in their books about ‘making your money work for you’, what they mean is that your money makes money for you. It’s also called capitalism: it’s the capital that works, not you. When you search on Google top ways to earn money while you sleep, the first page is full of ways that will help you generate passive income streams. Cryptocurrency has opened a new digital economy where traditional financial models are being replicated on decentralized infrastructures using blockchain. Adding to this, the industry has given rise to new models which are helping investors and traders in building multiple sources of cryptocurrency income which in turn, is resulting in the gradual growth of their portfolios.
With the ongoing extensions of DeFi for the last 2 years, the crypto industry has become one of the most attractive industries for anyone to earn passive income. In this article, we will explore some of the most widely used ways to generate passive income through cryptocurrency
1. OSOM’s DeFi Earn
OSOM has created a cutting-edge product that makes you grow your Euro investments with a steady passive income without any fee. All you need to do is deposit your Euros using their app or their platform. The platform acts as a lending aggregator of both decentralized and centralized crypto lending services.
Their proprietary aggregation model enables your investments to be diversified across multiple stablecoins and altcoins on their partnered platforms. This allows the platform to get the highest possible interest rate on your investments. You don’t need to worry about your investments as their platform is licensed by the EU and all the requirements will be already taken care of by the platform. You will also get a personalized dashboard with ROI insights to keep track of your deposits.
2. Staking
Staking is the most popular method of earning passive income and the best part, you can earn this income with less drainage of your energy, time and money.
Staking in short involves holding your coins in your stake wallet and enjoying rewards just for holding them. You can stake your coins by either hosting a staking node or participating in staking pools offered by many service providers or cryptocurrency exchanges. In the case of staking nodes, your funds will be locked for a time duration in the wallet whereas, with the service providers, you get options of both locked and unlocked staking.
Once you stake your coins by depositing the PoS coins like Polkadot (DOT), Cosmos (ATOM), NEO (NEO), or Tezos (XTZ) in your wallets, you start receiving rewards at certain intervals.
Behind the scenes, the staking nodes and staking pools are validating transactions and adding blocks in the PoS blockchains, and earning rewards or transaction fees for their efforts. If you want to increase your chance of being chosen as the next validator you need to increase the number of coins you carry in your wallet. With this, it is extremely crucial to research the fundamentals of the projects, the staking rates, the authenticity.
3. Lending
Crypto lending is the easiest method to earn money through cryptocurrency. If you are a lender and willing to earn high-interest payments for your existing crypto holdings, all you need to do is lend your cryptocurrency to the borrowers by depositing them in a wallet. In the case of P2P lending, these borrowers can be other borrowers whereas they can also be exchanges that provide borrowed funds to their traders for margin and leveraged trading.
The interest rates you earn are far higher than the banks and this is why, more and more people are opting for crypto lending as their primary source of earning crypto passively. Contrary to banks, crypto lending is automated, safer, faster, more transparent, and more profitable.
4. Crypto Dividends
Having a similar profit-sharing model derived from the stock markets, there are few projects which share their crypto profits with their token holders. Mostly, crypto exchanges build the utilities of their exchange tokens by offering discounts on trading fees or sharing their revenues with the token holders.
For example, Kucoin, Bibox, and Ascendex pay their token holders up to 50% of their revenues as dividends. To earn these dividends, all you need to do is hold their tokens on their native platform. The more you HODL the more you earn.
5. Yield Farming & Liquidity Pools
Yield farming, as the name suggests, means to farm or generate yields from cryptocurrencies. Similar to the relationship built with the financial institutions where depositors deposit funds to provide liquidity to the institutions, and in return, the depositors receive a fixed income, yield farming works on a similar principle in the DeFi markets.
DeFi markets have two parties - Liquidity Providers and DeFi Protocols. Yield Farmers or Liquidity Providers provide liquidity by depositing funds into a liquidity pool. This pool of funds provides users of a marketplace to borrow, exchange, or use for a variety of services.
incorporated in the network. Users have to pay for these services and these payments are used to reward the liquidity providers for their participation in the pool. This entire network is built on a decentralized protocol where all the payments are automated with almost zero fees to the middlemen.
Henceforth, these liquidity pools are captivating more and more traders because these protocols allow users to generate higher and safer returns without the use of any technical knowledge. Just connect your Metamask wallets, provide liquidity, and the returns start coming in.
6. Crypto Cashbacks
Cryptocurrency adoption is on the rise and the number of shopping merchants accepting Bitcoin and other altcoins is incessantly growing too. One of the most influential consequences of this adoption is the invention of crypto debit cards and these debit cards can be used to shop with cryptos.
Crypto cashback is a rewarding mechanism that allows you to earn cryptos when you shop using cryptos exactly how you earn cashbacks or reward points on your debit and credit cards.
A host of platforms using debit cards, credit cards (BlockFi), mobile apps (Pei), and browser extensions (Lolli) are now available for you to help you earn Bitcoin passively by giving you Bitcoin cashback when you shop in their partnered organizations
There are Startups like Earn.com and StormX which help you generate Bitcoin incomes for performing microtasks like answering questions, providing feedback on an app, or taking part in study groups.
7. Running Nodes
Another way you can earn passive income in crypto is by running nodes, although this method requires significant expertise with the technology including hardware, software, and algorithms. There are various types of nodes as per different consensus mechanisms like staking nodes and masternodes in the case of PoS blockchains, or running nodes for layer 2 solutions like Lightning Network.
You can become a validator if you become a staking node or a master node in the PoS blockchain or host Lightning payment channels to process transactions over the Lightning Network. In both cases, your passive income is generated by directly participating in the governance of a distributed ledger technology and you receive the transaction fee charged by the transactors of the network. Like staking nodes, projects with masternodes also require you to hold a minimum value of cryptocurrencies to be eligible to host one.
8. Mining
We all know what Bitcoin mining is. To simplify it, Bitcoin miners receive newly mined Bitcoins as rewards for validating transactions and adding blocks to Bitcoin’s Blockchain.
There are only two downsides to this process - initial costs and technical expertise. These costs include buying expensive hardware and providing a massive amount of computational power in your hardware.
There was a time before 2013 when Bitcoin could be mined using a CPU. But as the blockchain is growing and the network hash rate has increased, miners have now deployed Graphics Processing Units (GPUs) and Application-Specific Integrated Circuits (ASICs).
Alternative to mining, cloud mining started gaining popularity where you don’t need to buy expensive hardware, although you can still share your computational power. Just simply sign up on platforms and sign mining contracts with these companies. It is advised to only cloud mine using trusted sources and conducts intensive research on the service providers.
9. Affiliate and Referral Programs
If you are an influencer, a blog writer, a YouTuber, and enjoy a large number of web traffic on your website then earning passive income via affiliated programs is just the thing for you. Crypto projects and exchanges provide as high as 50% of their revenues from their customers to their affiliates.
Even if you are not you can participate in the referral programs where you can earn passive income for inviting the people you know to crypto platforms.
In both cases, you only need to make sure that your followers, friends, and family are registering on these projects’ platforms using your referral code.
10. Hard forks and Airdrops
Just like on visiting a shopping mall the buyers are provided with free samples of products, Airdrops too, implies the distribution of new cryptocurrency to the current crypto holders for free and sometimes in exchange for minor social activities like retweeting and tagging 3 friends.
A hard fork basically means splitting up the blockchain into two - the original blockchain and the new one. The splitting also results in the splitting of the token into an old and a new one. When a hard fork occurs you have to hold forked coins in your wallet during the date of a hard fork, and thereafter, you"ll be awarded additional cryptos based on the amount of cryptos you are holding.
This allows you to easily accumulate fresh cryptocurrencies for minimal efforts. What’s common between both methods is all you need to do is have the project’s wallet and hold tokens at the time of the event.
Please beware that there will be no case when the projects will be asking for your private keys at the time of airdrops or hard forks. Keep yourself aware of such scams and never share your private keys with anyone.
All these are very lucrative opportunities to grow your crypto earnings and with the advent of DeFi, a few of them are gaining tremendous popularity. Well, there are no free rides in Crypto. It is pivotal to make yourself aware of the legitimacy, risks, and technicalities like lock-in periods of each of these methods. All of these crypto income-generating practices are becoming safer and more reliable with increasing automation. The DeFi space will continue to bring more passive income generation opportunities which are simpler and trustworthy, which in consequence will lure more people into its ecosystem.
