Published in Passive Income
Image credit by Lily Georgia
Ishikawa Hinata
Product Lead
September 14, 2024
5 Best ways to make Passive Income through Crypto in 2024
Grow your crypto assets effortlessly with these 5 simple passive income methods. Discover the best strategy for your risk tolerance, security, and returns.
Dreaming of earning while you sleep? Then generating passive income through crypto should be your jam. But it isn’t as simple as casting a spell.
Although there are plenty of ways to earn passively through crypto, it requires a lot of research, intuition and knowledge about market trends. And while this blog doesn’t contain any magical formula, it lays a solid foundation for you to build up on. Here is an overview of the popular methods that can generate passive income from your crypto assets in 2024.
(We all wish we were Snorlax - sleep all day without worry. But we have bills to pay.)
Let’s dive right in.
Is it possible to earn passive income through crypto?
Yes, it is possible. The most popular ways are:
Staking
Liquidity Pools
Lending
Yield Farming
HODLing
Staking
In blockchains that run on Proof-of-Stake (PoS) mechanisms, your tokens can be staked to help secure the network and process transactions, and you can generate yield in return.
You can stake your tokens through centralised exchanges, staking pools or directly using a wallet. The rewards and risks vary depending on the blockchain, so be sure to DYOR on the blockchain.
Liquidity Pools
Liquidity is crucial to running a decentralised exchange. Liquidity providers are paid regularly for contributing funds to help run DEXs smoothly. You can participate in this process by locking your assets in liquidity pools.
The returns are relatively high, and the only major risk involved is impermanent loss, i.e. when market price fluctuations are so unexpected and rapid that your profits are affected. Research the authenticity of pools before investing in them.
Lending
Lending protocols connect lenders directly to borrowers, and lenders earn interest on funds they provide while retaining ownership.
The returns can vary between platforms, some offer compounded interest while others don’t. The risks in this method have to do with counterparty risk (when the borrower defaults on the loan), platform risk, and liquidity issues in the protocol.
HODLing
Although this may seem ridiculous, holding your assets through different market conditions isn’t easy. Remember that Bitcoin is the best asset class of this decade, but even that has had its fair share of extended bear markets. Only true diamond hands can hold on long enough to see high profits.
So choose your asset, enter at the right time, secure it in a cold wallet, and turn into Diamondhead! The bulls will eventually find you.
(Why would Ben 10 be the richest crypto investor? Because he has diamond hands 😂)
Yield Farming
Yield Farming is simply great! It involves storing your assets in smart contracts that generate yield for you. Yield-generating protocols invest your assets in activities like lending, liquidity pools, staking, etc. and you get a share of the profits earned.
You must carefully research the protocol and its yield-generating methods to avoid losses.
What makes yield farming specifically so great?
It is highly flexible
It is generally high-yielding.
Multipli fi offers yield farming!
💡 Multipli Fi employs a minimal risk arbitrage trading strategy to earn up to 25% APY on your assets. Learn more about Multipli fi here.
Other methods
Cloud mining: You can rent mining power from providers and contribute to mining.
Dividend-paying tokens: You earn extra rewards for holding certain tokens.
NFT royalties and staking: Although not widely popular, this is an easy way to earn profits.
Play-to-earn games: Certain developers pay you native tokens for playing their games.
FAQ on earning passive income through crypto in 2024.
Is it possible to earn passive income in Ethereum?
Yes, you can earn passive income in the Ethereum blockchain. Staking your eth on the blockchain is one solution.
Is it possible to earn passive income in Bitcoin?
Yes you can. But staking in the Bitcoin is not possible as it is a Proof-of-Work blockchain.
Is crypto mining considered passive income?
No, because mining requires active participation apart from huge investment and knowledge of coding.
How to ensure that the protocol I am investing for passive income in is safe?
DYOR always wins! Learn about the project, its founders, how it generates yield, how it protects your funds, etc. For example, Multipli fi has documented its yield-generating strategy and the security measures it has taken to protect your funds.
What are the risks involved with passive income generating strategies?
Risks can vary between methods. It is important to educate yourself with each method and the protocols you are aiming to invest in. Always DYOR, and keep a careful eye on your assets and market conditions.
What is the best way to earn passive income through crypto?
There is no single ‘best way’ to earn passive income in crypto. Different methods and tools offer different advantages and yield percentages. Dive into the industry and find the formula that works for you best!
(But if there ever was a ‘best way’, this spell will be it.)
If you’re interested in earning high yields on your assets through simple and minimal-risk arbitrage strategies, get started with Multipli fi now!
Continue Reading
