Investing in crypto involves buying, selling, and holding cryptocurrencies to make a profit. Its decentralized nature and potential for generating high returns with meager transaction fees make it a popular investment option for individuals and business institutions.
However, the recent high volatility in crypto has made several investors wary of cryptocurrency investments. This article explores passive cryptocurrency investments and highlights five low-risk investment opportunities to earn income in crypto with minimal effort.
What is Passive Income in Crypto?
Earning passive income in crypto involves primarily holding digital assets to earn rewards like dividends, interests, and staking benefits. It requires little or no effort from you.
All you need is the proper account and sufficient technical knowledge. Here are the top five ways to earn passive income in crypto:
Staking
Staking involves verifying cryptocurrency transactions to earn rewards. You commit a certain amount of digital assets to support a blockchain network. It is equivalent to earning interest on a regular savings account. However, it generates higher returns.
Depending on the blockchain network or crypto token, you may earn between five to twenty percent annually on the tokens staked. Therefore, to gain the most crypto staking, hold a lot of tokens for an extended period. You can find suitable wallets to keep your digital assets here: https://blog.tezro.com/best-crypto-wallets-canada/.
Popular crypto projects you can stake include Ethereum, Cardano, and Cosmos. They offer minimal stake thresholds. So buy some tokens, store them in a staking pool, and then sit back and reap the benefits.
Crypto lending
Crypto lending involves lending cryptocurrency funds to other users or protocols to earn interest. It involves minimal effort from the investor, who lends their funds to a borrower or a lending platform.
Crypto lending takes various forms, including decentralized and peer-to-peer (P2P) lending. Decentralized lending lends crypto funds to pools on lending and borrowing protocols, while P2P lending lends funds directly to other individuals on a lending platform.
Interest gets paid out periodically depending on the lending platform’s terms and conditions. Therefore, the interest rates on crypto lending platforms can vary widely depending on the platform and market conditions.
Crypto airdrops and hard forks
Crypto airdrops involve distributing tokens to multiple wallets simultaneously. Crypto and blockchain developers use it to promote new tokens, raise awareness about a feature, or reward users for their loyalty.
Airdropped tokens can be sold or held for future appreciation. To qualify for an airdrop, you can participate in a social media campaign, sign up for a mailing list, or meet other specific criteria.
Hard forks occur when an existing blockchain creates a new cryptocurrency. If you own the original cryptocurrency in a wallet that supports the fork, you get credited with an equivalent amount of the newly forked cryptocurrency.
Crypto mining
Crypto mining involves verifying transactions on a blockchain network to earn cryptocurrency rewards. You use powerful computers to solve complex mathematical equations to confirm and add blocks of transactions to the blockchain.
Proof-of-Work (PoW) mining requires significant electricity and specialized hardware. The first miner that solves the puzzle and validates the block receives newly minted cryptocurrency, and the validated transactions are added to the blockchain. Ethereum and Bitcoin are two of many cryptocurrencies that support proof-of-work mining.
Yield farming
Yield farming involves holding and locking digital assets in liquidity pools and lending protocols. It allows you to provide liquidity to a decentralized finance (DeFi) platform, which uses the funds to facilitate trades and earn interest on the assets. In return, you receive rewards in the form of tokens or fees.
Yield aggregators, also known as yield optimizers, simplify the yield farming process by automatically switching funds between different liquidity pools to maximize returns. These applications provide users with a more user-friendly and efficient way to participate in yield farming. Some of them include Yearn Finance, Curve/Convex Finance, and Beefy Finance.