Earning passive income with cryptos can help you achieve your financial goals. Passive income is earnings that flow in regular intervals without actively working for them.
5 Ways of Earning Passive Income with Crypto
People are more inclined to the idea of earning income passively with fiat currency. However, the advancement in the crypto sector has actuated a new digital economy. This allows investors to passively earn with crypto. Here are some ways to earn passive income with crypto:
1. Deposit your crypto into a CeFi (centralized finance) lending platform
One of the easiest ways of earning passive income with crypto is to deposit them into a centralized lending platform.
Although most experienced crypto users advise against depositing your crypto with third-party providers, CeFi lending platform user-friendliness has resulted in billions of dollars in crypto flowing into CeFi lending.
Once you deposit your funds into these lending platforms, you earn interest. The interest is usually paid in the deposited assets. Some examples of popular CeFi lenders are Nexo and BlockFi.
2. Cloud mining
Cloud mining is another way to earn passive income with crypto. It is the process of generating crypto by making use of computing power from a cloud mining operator or a third party. Cloud mining does not require a physical mining setup or technical expertise.
To earn from cloud mining, you just have to deposit funds into a cloud mining service provider. The service provider will in turn invest the funds you deposit into a physical mining operation. A portion of the cryptocurrency the service provider supports will be given to you when your investment starts earning rewards. Check out Genesis mining.
3. Buying and holding dividend-paying tokens
This is one of the easiest ways to earn passive income with crypto. However, you must understand that not all crypto tokens offer dividends. So, ensure to do your research to know those tokens that pay dividends.
One of the benefits of buying and holding dividend-paying tokens is that you get steady and consistent payments. These tokens offer you the opportunity to earn passive income. An example of a dividend token is the Nexo token.
You can learn more about dividend tokens here.
Lending is one of the most popular crypto services in the decentralized and centralized segments of the crypto sector. As an investor, you can lend out your digital assets to borrowers and earn interest on them.
Peer-to-peer lending services, for example, allows you to receive interest payments when you lock up your funds for a certain period. The interest rate may be variable or fixed. Several crypto exchange platforms allow you to earn interest on your crypto by lending it to borrowers.
5. Yield farming
Yield farming, which is also known as liquidity mining, crypto lending, or staking, is an increasingly popular way to earn passive income with crypto. Here, you lend your crypto holdings by locking them in a decentralized finance (DeFi) platform’s smart contract.
When you lend crypto capital, you provide liquidity to the DeFi platform; as a result, you are eligible to receive daily rewards that are yielded by the liquidity you provide.
The ways discussed above are some of the ways you can earn passive income with cryptos. If you are just getting started with crypto investment, you can consider depositing your funds into an interest-earning account. This method does not require a lot of know-how.
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