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Some people do not, however, desire to actively trade cryptocurrencies for profit. Investors can profit from cryptocurrencies without actively trading thanks to several passive income strategies. We'll look at some of the top passive income strategies for cryptocurrencies in this article.
Staking entails keeping a specific quantity of cryptocurrency in a wallet to support the network and reap rewards. Earning interest on a savings account is comparable to this. Depending on the cryptocurrency, staking rewards can range from 5% to 20% annually. Popular cryptocurrencies with staking incentives include Cosmos (ATOM), Polkadot (DOT), and Cardano (ADA).
Verifying transactions on a cryptocurrency network is known as mining, and in exchange, rewards are received. Individual mining used to be profitable, but doing so now is more expensive and difficult. As a result, many investors decide to invest in mining firms or pools to generate passive income. It is possible to mine several well-known cryptocurrencies, such as Bitcoin (BTC), Ethereum (ETH), and Litecoin (LTC).
Lending is when users or platforms lend cryptocurrency to one another in return for interest. This is comparable to traditional financial lending. Celsius Network, BlockFi, and Nexo are a few of the well-known cryptocurrency lending platforms. Lending rates can range from 2% to 10% annually, depending on the platform and the cryptocurrency.
Staking and master nodes are similar, but masternodes require a larger upfront investment. Running a masternode on a cryptocurrency network entails carrying out particular tasks to support the network. Operators of masternodes are rewarded with cryptocurrency in return. Depending on the cryptocurrency, masternode rewards can range from 5% to 50% annually.
Earning rewards for supplying liquidity to decentralized finance (DeFi) platforms is known as yield farming. The platform's native cryptocurrency or other cryptocurrencies may be earned as rewards by users. As yield farming involves interacting with decentralized platforms that might have smart contract security flaws, it can be risky. For yield farming, some well-liked DeFi platforms are Uniswap, SushiSwap, and Aave.
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Investors can use several passive income strategies to generate income from cryptocurrencies without engaging in active trading. Before investing in any cryptocurrency passive income strategy, it's crucial to conduct your research and understand the risks.
The information contained in this article is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice.