This platform is offered to you in partnership with POS Bakerz, a company specializing in cryptocurrency staking, operating infrastructures for Proof of Stake (PoS) blockchains and offering delegation services for Tezos holders (XTZ), Cosmos Network (ATOM), IRISnet (IRIS), Algorand (ALGO) and Terra Money (LUNA).
In this second article, we are going to share with you different ways to earn passive income through cryptocurrencies.
Indeed, it is now possible by several methods to generate passive income through the possession of cryptocurrencies. In this article, we’re going to walk you through the different ways you can use to generate cash flow as price volatility matters.
First, let’s start with staking. With the evolution of protocols, more and more cryptocurrencies are now operating under a Proof of Stake model to the detriment of Proof of Work.
As a reminder, the proof of stake consists in generating interests on the holding of its tokens while the proof of work consists in deploying ASICs, GPU / CPU or other hardware in order to solve complex mathematical problems and validate the blocks .
Several cryptocurrencies like NEO, Ontology (ONT), Tezos (XTZ), Cosmos (ATOM), IRISnet (IRIS), Algorand (ALGO) and many others will allow you to gain an inflation rate ranging from 5 to 15% or more on the cryptocurrencies held.
In staking, there are two ways to generate interest.
The first is by operating yourself a node (server) on the blockchain that you want but to do this you must have some technical knowledge for the deployment and maintenance of the node, skills in cyber security and finally a minimum to use as collateral of security on certain protocols, for example 8,000 Tezos, 1,000 Waves, 10 Cardano (ADA) and much more in the case of certain protocols like EOS or Ontology…
The second method is to delegate your voting rights to a node operator like POS Bakerz or others. In exchange for a fee, these operators called Validators or bakers in the case of Tezos will redistribute the inflation they receive on the protocols in question.
The main interest of staker cryptocurrencies is that in addition to profiting from volatility, you can now predict quasi-fixed cash flows (in crypto) based on your initial investment. You will also be able to take advantage of the accumulation of your interests over time and therefore you will hold more crypto without doing anything!
One of the disadvantages of this method is that you are exposed to market volatility. Of course, if the markets are going up, you can be doubly successful, but if you go down, you are also exposing yourself.
It is important to note that on certain protocols as is the case with Cosmos Network (ATOM) for example, there is a period of “unbonding” meaning that you have to wait a certain number of days before you can sell your tokens. ‘they were staker.
There is also a risk of slashing which means that part of your ATOM staker with a bad actor can make you lose part of your tokens. This occurs if the validator signs the same block twice or if his node falls HS for a certain period of days, it will lose efficiency which will penalize the validator and the people who have delegated it.
But it’s not the only way to get passive income in the cryptocurrency universe.
The other most popular way in the crypto world to generate passive income is lending, which is to lend your cryptocurrencies to other people to generate an interest rate.
There are several already existing solutions and not all of them operate under exactly the same model. With the development of DeFi (decentralized finance), more and more players like Compound, Celsius, Nüo and many others are entering this market and trying to offer decentralized and secure means to allow crypto holders to lend them out to earn interest.
This service is currently based mostly on Ethereum smarts contracts. The interest rate is determined based on supply and demand.
To earn interest, you simply have to go to the website of the service you want to use and then via the interface of their application, they just have to send your crypto to their smart contract and you will become a lender.
On the other hand, some people will borrow this amount (often for margin or short trading operations) in exchange for certain guarantees.
We invite you to take a look at these platforms for yourself to see the differences of each of them as well as the pros and cons.
It is important to note that platforms do not pay interest at the same rate (daily, weekly, etc.) and interest rates can also vary from service to service.
Finally, there are also other ways to generate passive income with cryptos other than staking and lending even if these two methods remain today the most used and developed in the world of crypto.
To generate passive income with cryptos you can also for example use trading bot like those offered by Napoleon X. You will not generate passive income strictly speaking but by giving API access to your trading accounts, you will thus being able to benefit from strategies managed by professionals. Be careful this does not mean that you will be a winner at all costs thanks to their trades.
You can also participate in exchange programs that redistribute part of the profits (generated by fees) to holders of their token. This is the case, for example, of Kucoin or Bibox.
Finally, you can simply use tools like the Brave search engine, which will allow you to generate BAT (Basic Attention Token) by browsing their explorer. You can also for example share your articles if you write on Steemit…
To conclude, here are the different ways that we have mentioned to allow you to generate interest on your cryptos:
- Trading bot
- Exchange token
- Earn rewards using crypto tools / sites
These methods do not guarantee you the rise in prices but will nevertheless allow you to generate passive income on the holding of your cryptocurrencies.
Now you just have to try them for yourself.
Do not hesitate to follow this forum, which will regularly publish content on the theme of Proof of Stake cryptocurrencies (Cosmos Network, Tezos, Polkadot, Ethereum 2.0…) but also more detailed information and guides to allow individuals to navigate more easily in the world of staking.
Disclaimer : This is not an investment advice. Cryptocurrencies are a highly volatile product. Delegating your cryptocurrencies involves risks (volatility, cyberattacks, etc.). Please conduct your own research before choosing a service.
POS Bakerz is a European company specializing in the staking of cryptocurrencies and based in London. We operate secure nodes for various Proof Of Stake cryptocurrencies such as Cosmos Network, Tezos, IRISnet, Terra Money and others.