The cryptocurrency market is attracting more and more people every day. Digital assets have a number of key qualities that contribute to their popularity. One of them is the possibility of making passive income in cryptocurrency. This is easily explained: the idea of earning while putting in almost no effort is always intriguing. Let’s take a look at three main ways of making passive income on crypto.
The best exchanges for passive income
To earn more, you need to choose the cryptocurrency exchange with lowest fees. Here are some of the best ones:
- Binance is the largest cryptocurrency exchange in terms of digital asset trading volume. It offers a variety of tools, including those focused on generating passive income. The trading fee on the exchange is 0.1%.
- WhiteBIT is a European crypto exchange offering an impressive list of digital assets available for trading, low trading fees: up to 0.1% (even lower in some cases), and nice withdrawal fees.
- OKX is one of the leading exchanges in the market in terms of the trading volume. It has a list of trading pairs and adequate fees: 0.1% for takers and 0.08% for makers.
Buying and storing
The easiest way to earn money on cryptocurrency passively is to buy and store it with a long-term perspective of the crypto price growing.
In this case, the key is the correct assessment of the asset potential. You need to get acquainted with the idea of cryptocurrency in detail, study the history of its development, plans for the future, and evaluate the professionalism of the development team and their experience in other projects.
It is also important to see the ratings from leading resources and crypto exchanges, and news about the chosen currency in order to form your own conclusions about its potential.
At the same time, remember that due to the fact that volatility is not as high as that of fiat, cryptocurrencies can rise and fall in price. But good research can help you minimize risks and make money on crypto.
Today, staking is one of the most popular ways of getting passive income, as it allows you to get higher profits with minimal risk and effort.
There are a few types of crypto staking, and they are all united by some common features:
- funds are placed on a certain digital wallet for a specific period at an interest;
- with the help of these funds, various financial and technical problems are solved;
- at the end of the period, the investor receives the placed funds and income in the interest.
Depending on the principle of operation, staking is divided into several types:
- technical staking was one of the first to appear and is used to confirm transactions on the network and add blocks to the blockchain of some cryptocurrencies.
- staking on crypto exchanges is much easier to understand. The exchange blocks the investor’s deposit for a certain period and rewards them with an interest rate at the end of the staking period;
- DeFi staking is fundamentally different. It is based on automatically executed smart contracts.
A great example of a crypto exchange staking is SMART Staking on the WhiteBIT. This is a tool that allows you to earn by saving funds on one of the plans. The tool works like bank deposits but with a much higher interest rate. You can earn up to 30% interest per year.
Liquidity pools and yield farming
For investors with experience, there are more complex ways of making passive income on cryptocurrency.
Participants put their assets into some storage, which ensures the liquidity for those who wish to exchange these assets. When buying or selling an asset through a liquidity pool, locked pool funds are used, and trading is carried out by an automatic market maker (AMM).
As a reward for putting their funds into the pool, investors receive passive income in the form of a percentage from trading fee proportional to their share in the total volume of liquidity.
As you can see, there are a lot of ways to get passive income from cryptocurrency. Chose the one that suits you better and let your funds work for you. Even without experience, special knowledge, or impressive savings one can start making passive income on digital assets.