Passive income in crypto

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So staking can be a financially attractive option for crypto investors who hold—rather than day-trade—assets, however small they might be. The great thing about staking is, while it might be underpinned by complex mathematics, actually staking requires very little technical knowledge. Here are the top five ranked by market cap, with their average yield rates. Yield rates vary across platforms and may change depending on the number of validators active in the network.

Broadly speaking, there are two ways of staking. The first is as a validator , running your own node. This method requires a bit of bootstrapping. You need to have a secure and stable technical infrastructure and the expertise to run a validator node yourself.

The minimum amount of coins required to stake is often relatively high, too. To become an Ethereum 2. But more commonly, staking is done via delegation —you delegate your coins to a validator that has the appropriate set-up. Validators will do the hard work of maintaining a node for you, in exchange for a commission taken off your staking rewards. Easy peasy! Some of the major SaaS companies include:. You keep custody of your assets at all times.

Most cryptocurrency exchanges run validators, allowing their customers to stake with them through the exchange's user interface. They include:. The process of staking on exchanges is often similar explained below. But exchanges' staking offerings differ by which cryptocurrencies are available for staking, their fees, and the locking period if any.

Not all major exchanges allow staking. Robinhood, a popular trading app, said in July that it may offer staking in the future. In line with regulations, exchanges may not let you stake if you live in certain jurisdictions, like New York or Hawaii. Staking is a pretty straightforward activity that takes just a few clicks.

In the example below, we show you how to stake Polkadot on Okcoin—when it comes to staking, there are more similarities than differences between platforms, and so these steps can be easily replicated. Exchanges will give you the opportunity to review the terms before depositing, like this one. Now that your DOT is staked, all you have to do is wait until the next day, and your earnings will start rolling in.

DOT rewards are deposited into your funding account daily at least in this example , and it will just keep compounding until you put a stop to it. Likewise, they can vary considerably in the fees they charge — ranging from very reasonable to almost ludicrous. Last, but by no means least, are dividend-yielding or yield-bearing tokens.

As their name suggests, these are tokens that entitle holders to a share of the profits generated by the underlying issuer — similar to the way that stocks often entitle holders to dividends. A wide variety of dividend-yielding tokens now exist and each operates in a slightly different way. Whereas in other cases, you may need to sign up to the issuing platform and complete KYC verification to claim your yields.

The returns these tokens provide are strongly related to the performance of the underlying platforms, which means your yields can vary over time. CoinMarketCap News. Table of Contents. Automate Your Savings. By Daniel Phillips.

Created 3mo ago, last updated 3mo ago. Table of Contents 1. Automate Your Savings 2. Become a Liquidity Provider 3. Participate in a Yield Farm 4. Stake Your Cryptocurrencies 5. Join a Guild 6. Join a Crypto Fund? Hold Yield-bearing Tokens.

Fortunately, there are now dozens of ways to do just that, by leveraging your cryptocurrencies to generate returns in the background, freeing up your time for more important matters — like reading our Bitcoin wrap-up. Others are decentralized savings platforms, like Orion Money and Anchor, which allow you to earn interest on your stablecoin deposits. As well as Yearn Finance and Autofarm, which automatically move your funds between a range of DeFi products to maximize the yield you earn.

How much can you earn? What to watch out for? Be wary of platforms offering suspiciously high yields, these could turn out to be Ponzi schemes. Decentralized exchanges revolutionized the way that traders access and capitalize on opportunities in the market by providing a permissionless source of liquidity for a wide variety of cryptocurrencies.

But a specific type of DEX, known as an automated market maker , also unlocked an entirely new way for cryptocurrency holders to generate a yield on their assets — by becoming liquidity providers. The amount you will earn can vary considerably between pools and platforms.

Generally, the higher your fraction of the overall liquidity and the more trading volume your pools see, the more you will earn. Yield farms generally pay in volatile cryptocurrencies. If this cryptocurrency collapses in value then the average APY can be relatively low, whereas if it appreciates in value then it can be relatively high. Many yield farms initially offer incredibly high yields, but this quickly drops when the total value staked see: TVL increases and if the reward token crashes in value.

Be sure to check your estimated yields regularly to stay on top of this. Proof-of-Stake POS not only introduced a more efficient way to maintain consensus in a decentralized system but also brings with it a new way for coin holders to earn a yield — through staking.

Depending on the cryptocurrency and whether it uses simple POS, Nominated-Proof-of-Stake NPoS , Delegated Proof-of-Stake DPoS , or some other variant, staking could require setting up a validator node and locking up a fixed minimum number of coins to participate in securing or powering the network or delegating your coins to a selected nominator or validator.

A huge number of cryptocurrencies now offer staking rewards, including the likes of Ethereum via the Beacon Chain , Solana, Cardano, Avalanche, Terra, and Polkadot. Some of these enforce a fixed minimum stake and a lock-up period, which can pose as barriers to some users.

The yield you will get usually depends on a few things, including the proportion of the supply that is staked and any commissions you might lose for DPoS and NPoS. Staking yields are paid out in the same coin that you stake, e. If the value of the coin you stake falls, there is a chance that you could end up net negative in fiat terms if the staking rewards do not cover the losses.

Some of these platforms allow NFT holders to pool their assets together as part of the guild, whereas others allow direct peer-to-peer NFT lending between NFT holders and borrowers in return for an agreed fee. Each of these differs in the way they work and the amount of manual input required, but often makes earning a yield far more efficient than manually playing supported games. The amount you can earn varies based on your guild, the specific play-to-earn games it supports, and the skills of the players.

Not all blockchain gaming guilds are created equal. Be sure to do your due diligence before handing over your funds or assets to any guild. Each crypto fund will generally provide a detailed overview of their past performance and quote specific metrics like their internal rate of return IRR which can be used to estimate your returns. Not all funds perform well and others have unusual terms and conditions.

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