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Friday, November 8, 2024

How to get passive income on cryptocurrency?

Choosing a strategy and using DeFi services

Cryptocurrency, like many other investment instruments, allows you to receive passive income. But no matter how passive income may be, it always requires the first active participation of the investor when choosing a strategy for his behavior in the market.

The most affordable way for a retail investor who does not have millions of dollars to invest in earning passive income on cryptocurrency is to use various DeFi protocols and farming schemes (yields farming), crypto lending, and so on. But then again: these schemes carry high risks and require a thoughtful approach when investing.

It will not work in a couple of hours to figure it out and choose a win-win option. You will have to spend time, study various strategies, the work of decentralized finance, read forums, be sure to study the projects themselves, read the main attack vectors on DeFi protocols that lead to millions of losses.

So, on the one hand, this is passive income, and on the other hand, it suits investors with an active position in the market. There is probably no such passive income as renting out your grandmother’s apartment on the crypto market.

Landing as a way of passive income

With certain knowledge, cryptocurrency tools can be a great way to passively earn money. As statistics show, today every third investor keeps part of his funds in digital currency, and 16% used it to buy foreign currency.

The popularity is growing and the majority considers cryptocurrency as a way to receive passive income. The easiest way, which does not require any knowledge, is to follow the deposit path, which works on the principle of a traditional bank deposit, but the settlement system here is cryptocurrency.

A crypto investor lends either to exchanges (and they increase liquidity due to this) or to individuals. The transferred funds are blocked in the smart contract.

For example, on the largest cryptocurrency exchange in terms of trading volumes, Binance, there are two types of landing:

  • Perpetual contract, It has a low interest rate, but funds from such a contract can be withdrawn or added at any time;
  • Fixed contract, Usually set for a certain period of time (10, 15, 30 days, etc.). Has a higher interest rate. Funds from such a contract cannot be withdrawn until its expiration date.

Binance users have the option to deposit cryptocurrencies with floating rate deposits using USDT stablecoins. The interest rate on such a deposit will be 10% per annum.

The Axie Infinity (AXS) Token Fixed Contract offers 50% APR. But the funds invested in the contract will not be available for 15 days.

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