How to earn passive income with crypto

Tien Nguyen

In contrast to active income, passive income is another way to earn money with just a little or no ongoing effort from interest, dividends, or rental property. 

This works quite similarly to cryptocurrency. You can earn money on your crypto assets without active involvement on your part. 

In this article, we’ll introduce to you some ways to earn passive crypto income. Some of them are more profitable than others. No matter what strategy you choose, it can still make profits for you without much effort.

1. Yield farming

Yield farming

Yield farming in Decentralized Finance (Defi) - Source: PixelPlex

Yield farming is a strategy to earn extra financial rewards with crypto holdings. 

To yield farm, crypto holders deposit their funds into a liquidity pool of a decentralized exchange platform. A liquidity pool is basically a collection of crypto tokens that are put together and locked in smart contracts. And the platform will use these currencies to maintain liquidity, trading, lending, and borrowing. 

So, to make a liquidity pool works effectively, liquidity providers (LPs) who invest their funds play a very most important role. But, what triggers them to contribute their tokens to that? 

The trading fees. 

In a liquidity pool, a trader is charged a fee of 0.2% on the swap volume (token sold) for each time transaction is made. These fees go straight into the pool, which makes it richer over time. 

The trading fees are distributed proportionally to all the liquidity providers in the pool. Hence, the more crypto assets they deposit, the more fees they’ll earn. 

The interest they earned daily is paid in the form of new crypto coins because the value of these new coins will increase. It’s better to have your assets working rather than being idle. 

Besides, users often earn passive income through other liquidity incentives such as governance tokens and newly minted tokens. You can also choose to stake these incentives in other liquidity pools because it will increase the chance of earning extra rewards. A liquidity provider can collaborate with a liquidity pool or multiple liquidity pools and receives incentives later. 

2. Crypto savings account

Crypto savings account

Crypto savings account - Source:

Crypto savings account allows users to earn interest on the crypto assets they deposit into. Using this service on the Defi platform means that you allow them the right to use your crypto asset for any purpose. 

It works just similarly to how regular banks operate. They lend out your money to customers or other financial institutions for a period of time with higher interest and give you the interest for that service later. 

You can start to accrue interest right from the very first day you deposit your crypto assets into a savings account. 

Just like regular bank savings accounts, they have offers with different rates for you to choose from based on your need. The flexible savings plans allow you to withdraw your crypto assets whenever you need while the fixed ones keep your assets for a set amount of time. So, the interest rate in a fixed plan is obviously higher than in a flexible one. Depending on whether you choose flexible or fixed terms, your APY (Annual Percentage Yield) will be different.

Generally, this strategy is quite sustainable and low-risk.

3. Cloud mining

Cloud mining

Cloud mining - Source: Investopedia

Cloud mining is a cryptocurrency mining process without directly using mining equipment and hardware but using rented cloud computing power. 

This process also allows investors to mine Bitcoin or altcoins with no need to manage the resources.

In cloud mining, the providers rent out computing power to miners. This is so much better compared to traditional mining because they don’t have to invest in their own resources like mining equipment and hardware which requires a large upfront investment. 

Users can join remotely in cryptocurrency mining by opening an account and paying a minimal cost, which is easier and more accessible for global users.  

So how does it work? The service providers buy or build a mining rig and then rent out the hashing power to miners. The cryptocurrency they mined then is sent to their wallet. 

The mining process operation is quite similar to how cryptocurrency mining works. Once transactions are verified and added to a blockchain, new coins will be created. Each time a transaction is validated and added to the blockchain, thereby creating a new block. By adding verified blocks to the chain, miners are then rewarded with crypto. 

4. Crypto lending platforms

Crypto lending platforms

Crypto lending platforms - Source: Medium 

Investors can lend out crypto in several ways. You can loan your crypto to users who are in need for a set period of time in exchange for a fee.

There have 3 factors that affect your amount earned including the total value of crypto being lent, the duration of the loan, and the interest rate. Longer loans, larger loans, and higher rates will lead to more income from the paid interest. In some cases, the crypto lenders choose the terms of the loans they create. In others, a third party is responsible for setting up the terms ahead of time.

There are 4 crypto lending options decentralized or Defi lending; peer-to-peer lending (P2P); centralized lending; and margin lending. You should research thoroughly each option before doing execution. 

5. Staking


Staking - Source: Staking Facilities 

Proof-of-stake is a blockchain consensus mechanism that serves as an alternative to Bitcoin’s proof-of-work. It allows distributed network participants to come to an agreement about new data which is added to the blockchain.

They can participate in the governance process, which involved validating transactions. Thereby, it gets rid of the need to have central authorities such as banks. Blockchains can randomly choose participants from a pool of users and elevate them to the rank of validators. They are then rewarded in turn for their contribution to the network’s validity. So they must have enough tokens to be eligible for the next block in the chain.

The amount of earnings you will get from staking depends mostly on the token itself. The value of the tokens being staked can increase or decrease. If the token’s value increases, so do your earnings. If it decreases, so do your earnings. Making the right choice right from the start can help you avoid losing your tokens and increase your chance of being successful. 

6. Affiliates and Referrals 

Affiliates and Referrals 

Affiliates and Referrals - Source: Bycomercial

Many projects in the crypto world looking for attention from as many users as possible. Many businesses use this kind of program to increase their sales, and trading volumes and grow their customer base. Some of them reward early adopters while others provide rewards for bringing new clients to their platform. These methods are all great for not only earning passive income but also requiring fewer resources. 

Most types of affiliate programs focus on promoting crypto-related products or services. So if you have a large number of followers on social media platforms, why don’t you take advantage of that to earn passive crypto income from now on? Just remember to research carefully to seek a program that has a high commission rate and a good reputation. 

7. Airdrops 


Airdrops - Source: Hashnode Web3

Crypto Airdrops are attached to various blockchain-based projects, where developers offer tokens free of charge to the members of the crypto community. They are usually provided when new coins are created. 

This is a marketing tactic to raise awareness and grow the market for their product. The purpose of airdrops is also to distribute mined coins or tokens to specific wallet addresses to keep the recipient engaged. Whether you succeed with this strategy or not depends on how the cryptocurrency’s value will evolve.

First, you need to have ownership of a specific wallet address to receive an airdrop. Then, you need to choose the project that has airdrops carefully. 

They will have some particular tasks for you to complete before receiving airdrops. Some of these tasks may include holding a specific smart contract wallet, signing up or creating an account for receiving regular updates, and re-tweeting or sharing a post,... 

So if you want to get free tokens as many as possible, creating multiple accounts to participate in the programs is the best choice. The more accounts you have, the more chance to get more free tokens. 

How can you create multiple accounts with different IPs and browser fingerprints? You can use antidetect browser like Hidemyacc in conjunction with a proxy to get the best result to avoid banning or blocking. 

Key Takeaways

No matter what ways you choose to earn your passive crypto income, just make sure you have already thoroughly and properly researched it. Those methods can help you earn profits but also has some low or high risks. Don’t forget to prepare carefully before leaning into it. 

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