Earn Money From Bitcoin
If you own more than one cryptocurrency, you’ve probably realized that you can make incredible profits from cryptocurrency trading and long-term investing, but also spend a lot of time tracking your portfolio, chasing opportunities and managing assets.
But what if you want to earn passive income without the hassle of keeping a close eye on the market 24/7? Fortunately, there are dozens of ways to generate income from your cryptocurrencies without any effort. This way, you can spend your extra time on more important things, like reading our delightful articles, such as our 2021 Bitcoin recap. Earn Money From Bitcoin
Let’s take a look at 7 ways to make your cryptocurrencies work for you. With little to no input or even management, these methods allow you to earn attractive passive income.
- Automate Your Savings
In the same way that interest is earned by holding traditional currencies in a time deposit account, cryptocurrencies can be deposited on various platforms to earn returns.
These include centralized crypto deposit accounts such as those offered by Nexo, BlockFi and Crypto.com. Funds are often used to provide over-collateralized loans to institutional borrowers. Similarly, many exchanges, including Binance and Huobi, enable users to earn passive income by depositing cryptocurrencies.
On the other hand, there are decentralized platforms such as Orion Money and Anchor that offer the opportunity to earn interest on stablecoin deposits. There are also options like Yearn Finance and Autofarm, which automatically move funds between DeFi products to maximize your earnings.
These are arguably among the simplest and most effortless ways to generate passive income from your cryptocurrency trading. Because they require little to no knowledge to start earning.
How much can you earn? Depending on the asset you stake and the platform you choose, it’s usually possible to earn an annualized return (APY) of 5 to 20 percent.
What should you look out for? Be wary of platforms offering suspiciously high returns. These may be fraudulent schemes, such as Ponzi schemes.
- Be a Liquidity Provider
Decentralized exchanges have revolutionized the way investors can access market prices and take advantage of opportunities by providing liquidity on various cryptocurrencies without the need for permission.
One particular type of decentralized exchange (DEX) in particular, known as an automated market maker (AMM), has created an entirely new way for cryptocurrency holders to earn a return on their assets by becoming liquidity providers.
These platforms offer decentralized liquidity pools that allow users to trade. By setting ratios of two or more assets held in these pools at the same time, the amount of return can be increased. For example, a pool of 100 ETH and 400,000 USDC would price ETH at $4,000 and each USDC token at 0.00025 ETH.
Liquidity is usually provided by the community. They are required to keep a certain proportion of their assets at all times, regardless of how much liquidity is added. This liquidity is then used for traders who trade using the pool.
This is where things get interesting. When an investor buys liquidity from the pool, they typically pay a transaction fee of around 0.2 to 0.3 percent of the transaction amount. This amount is split between all liquidity providers, including you.
There are now a large number of AMMs, and most leading smart contract platforms have one or more suitable options. The most popular names at the moment include Uniswap (on Ethereum), PancakeSwap (on BNB Chain), Pangolin (on Avalanche), WagyuSwap (on Velas) and SushiSwap (on multiple chains).
How much can you win? The amount you can earn can vary significantly across pools and platforms. In general, the higher your total amount of liquidity and the more trading volume is captured in your pool, the more you earn. The amount of income can potentially range from zero to 100 percent APY.
What should you watch out for? If you are providing liquidity to highly volatile assets, you should be aware of the impermanent loss process.
- Participate in Yield Farming
If you are a liquidity provider, yield farming services allow you to earn additional returns on your assets.
This model, which is a combination of the words “yield” meaning “to yield” and “farming” meaning “to farm”, makes it possible to generate income. Generally, in order to earn through the reward pool, it is necessary to stake existing liquidity provider (LP) tokens to a specific farm.
Once the tokens are staked into the pool, a portion of the transaction fees paid is received as income on a daily, weekly or monthly basis. For example, if you contribute 1 percent of the pool, you usually receive 1 percent of the rewards offered.
Many AMMs, including PancakeSwap, TraderJoe and SushiSwap, have yield farming built in, while protocols like Venus work separately.
These farms typically generate income by investing in newly launched cryptocurrency. It is also possible to generate income by investing in service and governance assets, such as the CAKE token on the PancakeSwap protocol and the WAG token on the WagyuSwap protocol. Most platforms offer a set APY rate based on the current value of the reward token and the size of the stake, but this can change over time.
How much can you earn? In the yield farming model, you are usually paid in cryptocurrencies with high price volatility. If the cryptocurrency becomes worthless, the average APY rate can remain relatively low. However, if its value rises, the rates can be similarly high. If you withdraw your income regularly, you can expect an APY of around 5 to 20 percent.
What should you look out for? Many yield farm models offer incredibly high initial returns. However, if the total amount staked (see TVL) gets too high and the value of the reward token decreases, this rate drops rapidly. You should regularly check the pools to ensure that the expected income level is met.
- Stake Your Cryptocurrencies
The Proof-of-Share (POS) algorithm has not only enabled the consensus structure in decentralized systems to function properly, but has also opened the door for cryptocurrency holders to earn a return by staking.
Staking can vary depending on the cryptocurrency and POS, Nominated Proof of Stake (NPoS), Delegated Proof of Stake (DPoS) or another consensus algorithm. It may require the installation of a validator node, or it may involve locking up a certain amount of tokens to power the network and transfer cryptocurrencies to the chosen candidate or validator.
In both cases, staking users earn a return on the increase in the amount of cryptocurrency units locked or on the transaction fees accumulated on the network.
Solana can distribute staking rewards in a wide range of cryptocurrencies, including Cardano, Avalanche, Terra, Polkadot, and Ethereum thanks to Beacon Chain. Some of these may require a minimum stake amount and lockup period, which can be a barrier for some users.
In any case, once staked, the return is passive. That is, it requires little or no intervention or monitoring. Nevertheless, it may be desirable to regularly monetize the proceeds against high price volatility. On the other hand, if the currency is expected to appreciate, it can be used as a long-term investment.
How much can you earn? Your income can often depend on the ratio of the staked amount to the supply and the commissions to be lost on DPoS and NPoS standards. Generally, an APY of 5 to 15 percent can be expected.
What should you pay attention to? Stake returns are paid with the token locked into the system. So when you stake DOT, you get DOT as a reward. If the value of the staked cryptocurrency falls and the staking rewards do not cover the losses, there is a possibility of becoming “net negative” in traditional terms.
- Join the Alliance
If you’ve been involved in one of the increasingly popular earn-as-you-play projects, you may have noticed that you need to spend quite a bit of time playing these games and start using your in-game assets or NFTs.
After all, you need to play these games to earn from the system. But thanks to the development of the guild system, you no longer have to play the game all the time.
Guilds are win-as-you-play protocols that allow investors and players to work together for mutual benefit. In general, investors provide the funds and assets, while players securely leverage these assets to earn a return. Profits are then shared between investors and players, as well as intermediaries such as managers. Managers, also called “scholars”, prepare educational materials and documents for players.
Some of these platforms allow NFT holders who are part of associations to pool their assets. Others allow direct peer-to-peer NFT lending between NFT holders and borrowers for an agreed fee.
A wide variety of guilds are currently operating, including Yield Guild Games (YGG), Good Games Guild (GGG), and Merit Circle. These guilds differ in how they operate and the minimum amount of entry required. But generally, passive monetization works more efficiently than earning directly from playing supported games.
How much can you earn? The amount you can earn varies depending on the earn-as-you-play projects supported by the guild and the skill of the players. Roughly, you can earn around 20 to 40 percent of what you could earn playing the game yourself, without having to play at all.
What should you pay attention to? Not all blockchain gaming unions are created equal. Be sure to do your due diligence before transferring your money or assets to any of them.
- Join a Crypto Fund
As you’ve probably realized by now, most passive income models, such as pooling liquidity, running a validator node, or joining a syndicate, require some initial effort and regular monitoring.
Crypto funds are an exception as they offer truly passive income. In the same way that traditional currencies (fiat) are invested in hedge funds, crypto funds allow you to generate income using your digital assets and often fiat currency.
Examples include relatively simple funds such as single-asset investment products like Grayscale’s Bitcoin trust or the Decentraland trust. These make it possible for fiat investors to take advantage of price volatility with a single cryptocurrency.
Other fund options, such as Pantera Capital, include sophisticated investment products such as the Pantera Blockchain Fund, which offers access to a wide range of options in the cryptocurrency markets, including venture capital and liquid tokens.
Entry to these funds is not easy, however. They can have a minimum investment of $100,000 or more than $1 million, and they can also require a financial reputation. Similarly, the fees charged can vary significantly. They can be very reasonable or jaw-dropping.
How much can you earn? Each crypto fund will usually provide a detailed breakdown of past performance. They also include specific data, such as internal rates of return (IRR), which can be used to estimate your returns.
What should you look out for? Not all funds perform well and some may have unusual terms and conditions. We recommend that you review the official documents before investing your money, paying particular attention to the stated redemption period for the redemption of the invested money. This may be very long.
- Accumulate Tokens with Yield Feature
Last but not least are dividend-yielding or yield-bearing tokens. As their name suggests, these tokens entitle their holders to a share of the profits generated by the issuer. It is similar to the dividend system given to shareholders.
Today, the number of dividend-yielding tokens has increased and they work differently from each other. Among the most popular dividend-yielding tokens are Kucoin Shares (KCS) and AscendEx (BTMX), both of which pay a portion of their transaction fee revenue to token holders. There is also Nexo (NEXO), which pays a portion of its profits as dividends to token holders.
Sometimes just holding these tokens is enough to qualify for dividends. They are then periodically distributed as airdrops to each token holder’s wallet. In some projects, you may need to register on the platform and complete Know Your Customer (KYC) verification to claim income.
The dividend received on the token is directly proportional to the performance of the platforms. This means that returns may vary over time.
How much can you earn? The income provided by tokens with dividend features can vary widely. But to generalize, some of the popular options can offer around 5 to 10 percent APY.
What should you pay attention to? The amount you earn may increase or decrease depending on the token issuer’s profits. Likewise, dividend-yielding tokens are also volatile. We recommend keeping track of your entry price and dividend payments, and reviewing your APY rate frequently.