10+ Ways to Earn Passive Income with Crypto in 2023

Cryptocurrencies are not only a way to invest but also a way to earn passive income. Passive income is money that you make without having to work actively for it. Crypto offers various passive income avenues like staking, lending, mining, yield farming, and more. In this article, we will explore some of the best passive income crypto ideas that you can try in 2023 and beyond. Whether you are a beginner or an expert, you will find something that suits your risk appetite and your goals.

Pro Tips
1. Explore this comprehensive guide to passive income opportunities within decentralized finance.
2. Discover AI and ChatGPT passive income ideas, harnessing the potential of generative AI’s capabilities across diverse sectors.
3. Check the guide uncovering the most underrated cryptocurrencies.

Staking

Staking is one of the most popular and simplest ways to earn passive income with cryptocurrency. It involves locking up your crypto assets in a Proof-of-Stake (PoS) blockchain network to help validate transactions and secure the network. In return, you earn rewards in new tokens or transaction fees.

Staking is a great passive income strategy for long-term crypto investors. It’s relatively low-risk, as you don’t have to worry about losing your crypto assets as long as you stake them with a reputable platform. The rewards can be significant, with some PoS blockchains offering annual staking yields of up to 20% or more.

Moreover, staking is accessible to everyone. You don’t need to have a lot of technical expertise or a large amount of crypto to get started. Many exchanges and staking platforms now offer staking services with minimum requirements as low as $100 or even less.

Pros:

• Low-risk
• Accessible
• Profitable
• Helps secure the network

Cons:

• Impermanent loss
• Lockup periods
• The volatility of the cryptocurrency you are staking
• The fees associated with staking
• The security of the staking platform

Yield farming

Yield farming involves depositing cryptocurrencies into yield-generating pools on DeFi platforms. While it requires more attention and research due to the variety of protocols, it offers the potential for substantial returns.

In yield farming, you act like a digital farmer, depositing your crypto assets into pools where they interact with DeFi dynamics to earn interest. The method demands more engagement compared to other passive income avenues. In addition, the returns can fluctuate based on factors like participation rates.

Yield farming can require active protocol selection or using yield aggregators that automatically distribute your deposits across various sources. This simplifies the process while maintaining the potential for earning interest.

Pros:

• High potential returns
• Low barrier to entry
• Diversified income streams
• Increased liquidity

Cons:

• High risk
• Impermanent loss
• Volatility
• Rug pulls

Liquidity mining

Liquidity mining allows you to earn interest on your crypto assets by lending them to decentralized exchanges (DEXs). These platforms enable users to swap different cryptocurrencies without relying on a central authority.

By providing liquidity to DEXs, you’re contributing to the growth and development of the decentralized finance sector.

The rewards you earn from liquidity mining can be very lucrative. Some DEXs offer annual percentage yields (APYs) of over 100%, meaning you could double your money in a year. However, the rewards vary depending on the amount of liquidity you provide, the demand and supply of the crypto assets, and the competition among liquidity providers.

Liquidity mining is not without risks, however. There are technical threats, such as smart contract bugs or hacks, that could result in the loss of your funds. There are also market risks, such as price fluctuations or impermanent loss.

Pros:

• High potential returns
• Low barrier to entry
• Diversified income streams
• Increased liquidity

Cons:

• Impermanent loss
• Volatility
• Rug pulls; it’s important to only invest in liquidity mining protocols that are well-established and have a good reputation.

Decentralized crypto lending

Decentralized crypto lending is a form of peer-to-peer lending that uses blockchain technology and smart contracts to facilitate loans between lenders and borrowers of cryptocurrency. Unlike traditional lending platforms, crypto lending platforms do not rely on a centralized intermediary, such as a bank or a company, to manage the lending process. Instead, the platform is run by a network of users who provide liquidity and governance to the platform.

Decentralized crypto lending platforms allow users to lend and borrow cryptocurrency transparently. Lenders can deposit their cryptocurrency into a smart contract, which acts as a pool of funds that can be borrowed by other users. Borrowers can then request a loan from the pool, specifying the amount, duration, and interest rate they are willing to pay. The platform then matches the borrowers with the lenders who offer the best terms and executes the loan agreement using smart contracts.

The smart contracts ensure that the loan is secured by collateral, which is usually another cryptocurrency that the borrower deposits into the smart contract. The collateral is a guarantee that the borrower will repay the loan and interest. If the borrower fails to repay the loan or if the value of the collateral drops below a certain threshold, the smart contract can liquidate the collateral and return it to the lender.

Lenders can earn interest on their cryptocurrency by providing liquidity to the platform. The interest rate is determined by supply and demand, as well as by the risk profile of the loan. Besides, lenders can also earn additional income from trading fees and platform fees that are generated by the platform.

Pros:

• High potential returns
• Low barrier to entry
• Diversified income stream
• Increased liquidity

Cons:

• Risk of default
• Volatility
• Technical complexity

Crypto savings accounts

Crypto savings accounts allow you to deposit your cryptocurrency to earn interest. Crypto savings accounts are offered by various platforms, such as centralized exchanges, decentralized exchanges, and lending platforms.

Such accounts are similar to traditional savings accounts but offer higher interest rates. The rates vary depending on the platform and the type of cryptocurrency you deposit. Some platforms offer as high as 20% or more per year. The interest you earn is compounded, which means that it earns interest on itself. This can help you to increase your cryptocurrency holdings over time.

To use a crypto savings account, you need to deposit your cryptocurrency into the account. The platform will then use your cryptocurrency for various purposes, such as lending it to other users, providing liquidity to decentralized exchanges, or investing it in other projects. You will receive interest payments periodically, usually daily or weekly. You can withdraw your funds at any time, but some platforms may charge a withdrawal fee or require a minimum balance.

Crypto savings accounts are a relatively safe way to earn passive income with cryptocurrency. Your cryptocurrency is stored in cold storage (not connected to the internet), which reduces the risk of hacking attacks or theft. However, there are still risks involved, such as the volatility of cryptocurrency prices, the fees charged by the platform, and the possibility of platform failure or fraud.

Pros:

• High potential returns
• Low barrier to entry
• Diversified income streams
• Safety
• Convenience

Cons:

• Volatility
• Fees
• Platform risk

Cloud mining

Cloud mining is a great way to earn passive income with cryptocurrency. It allows you to participate in the mining process without having to purchase expensive hardware or deal with the technical aspects of mining.

With cloud mining, you simply pay a monthly or yearly fee to a service provider who will mine cryptocurrency for you. In exchange, you will receive a share of the mining rewards.

Cloud mining can be a great way to earn passive income if you are looking to get involved in the cryptocurrency mining process without having to invest a lot of time or money.

However, it is important to do your research before choosing a cloud mining service provider. There have been several scams in the cloud mining industry, so it is important to make sure that you are choosing a reputable company.

When selecting a cloud mining service, consider these factors: Check the provider’s reputation and longevity in the industry. Seek transparency in their mining operations and reward calculations. Understand and assess any applicable fees beforehand. Prioritize providers with reliable customer support for troubleshooting and assistance.

Pros:

• No need to purchase expensive hardware
• No need to deal with the technical aspects of mining
• Potential for high returns
• Easy to get started

Cons:

• High fees
• Risk of fraud
• The volatility of cryptocurrency prices

Dividend-earning tokens

Dividend-earning tokens are a great way to earn passive income with cryptocurrency. They are similar to dividend-paying stocks, in that you earn rewards simply by holding the token.

There are several different tokens available, each with its unique features and benefits. Some of the most popular dividend-earning tokens include:

• VeChain (VET): VET holders earn Thor (VTHO) rewards, which can be used to pay transaction fees on the VeChainThor blockchain.
• KuCoin Shares (KCS): KCS holders receive a share of the daily transaction fees generated by the KuCoin exchange.
• Binance Coin (BNB): BNB holders receive a share of the quarterly profits generated by the Binance exchange.
• Polkadot (DOT): DOT holders are eligible to participate in the governance of the Polkadot network and receive rewards for staking their tokens.
• Tezos (XTZ): XTZ holders are eligible to participate in the governance of the Tezos network and receive rewards for baking their tokens.

Dividend-earning tokens can be a great way to earn passive income with cryptocurrency. However, it is important to do your research before investing in any dividend-earning token. Make sure to understand the tokenomics of the token and the risks involved.

Pros:

• Earn rewards simply by holding the token
• Potential for high returns
• Diversification

Cons:

• The volatility of cryptocurrency prices
• Risk of losing rewards

Crypto affiliate and referral programs

Crypto affiliate and referral programs are a great way to earn passive income with cryptocurrency. They are similar to affiliate marketing programs in the traditional world, but they allow you to earn cryptocurrency rewards for referring new users to crypto platforms and exchanges.

To participate in a crypto affiliate or referral program, you will need to sign up for the program and create a unique referral link. You can then share this link with your friends, family, and followers on social media. When someone clicks on your link and signs up for the platform or exchange, you will earn a commission.

The amount of commission you earn will vary depending on the program. Some programs offer flat-rate commissions, while others offer percentage-based commissions. You can also earn more commission if the person you refer makes a deposit or trades on the platform.

Crypto affiliate and referral programs can be a great way to earn passive income with cryptocurrency. They are relatively easy to get started with and can be a great way to promote your favorite crypto platforms and exchanges.

Pros:

• Easy to get started
• Low barrier to entry
• Potential for high returns

Cons:

• Competition: There is a lot of competition for crypto affiliate and referral programs. You will need to find a way to stand out from the competition to earn a good income.
• Fraud: There have been cases of fraud in the crypto affiliate and referral space. You need to be careful to only participate in legitimate programs.

Airdrops

Airdrops are a great way to earn free cryptocurrency. They are essentially free gifts of cryptocurrency that are given to users by crypto projects.

Airdrops are often used by new crypto projects to distribute their tokens to the community and to get people interested in their projects. They can also be used by established crypto projects to reward loyal users.

To participate in an airdrop, you will usually need to meet requirements, such as holding a certain amount of cryptocurrency, following the project on social media, or participating in a contest.

Once you have met the requirements, you will be eligible to receive the airdrop tokens. The amount of tokens you receive will vary depending on the project.

Airdrops can be a great way to earn free cryptocurrency. However, it is important to do your research before participating in any airdrop. Make sure the project is legitimate and that the airdrop is not a scam.

Pros:

• Free cryptocurrency
• Low barrier to entry

Cons:

• Risk of scams: There have been cases of scams in the airdrop space. You need to be careful to only participate in legitimate airdrops.
• Time commitment: Some airdrops require you to complete tasks or meet certain requirements, which can take time.
• The volatility of cryptocurrency prices

Play-to-earn games

Play-to-earn (P2E) games are a great way to earn passive income with cryptocurrency. They are essentially video games that allow you to earn crypto by playing.

P2E games are often built on blockchain technology, which allows players to own their in-game assets, such as characters, items, and land. This means that players can sell their in-game assets for cryptocurrency, which can be a great way to earn passive income.

In addition to selling in-game assets, P2E games often offer other ways to earn cryptocurrency, such as:

1. Winning matches against other players
2. Completing quests
3. Mining for resources
4. Breeding and selling NFTs

The amount of cryptocurrency you can earn from P2E games will vary depending on the game and your skill level. However, even casual players can earn a significant amount of crypto by playing P2E games.

Pros:

• Fun and engaging
• Low barrier to entry
• Real-world value: The in-game assets you earn in P2E games have real-world value. You can sell them for cryptocurrency, which you can then exchange for fiat currency.

Cons:

• The volatility of cryptocurrency prices
• Risk of scams
• Time commitment

Master nodes

Masternodes are a great way to earn passive income with cryptocurrency. They are servers on a decentralized network that perform important tasks, such as verifying transactions and providing liquidity.

In return for providing these services, master node operators are rewarded with cryptocurrency. The amount of cryptocurrency you earn will depend on the number of master nodes you operate and the cryptocurrency you are running.

Masternodes can be a great way to earn passive income with cryptocurrency, but they require a significant investment. You will need to purchase a certain amount of cryptocurrency to operate a master node, and you will also need to pay for the cost of running the server.

Pros:

• High rewards
• Security

Cons:

• High investment
• Technical knowledge
• Risk

Conclusion 

There are many different ways to earn passive income with cryptocurrency. The best way for you will depend on your circumstances and risk tolerance.

If you are new to cryptocurrency, we recommend starting with some of the more beginner-friendly passive income opportunities, such as staking or lending. As you gain more experience, you can move on to more complex passive income opportunities, like yield farming or master nodes.

If you are willing to do your research and take on some risk, earning passive income with cryptocurrency can be a great way to make money.

FAQ

There is no definitive answer to this question, as different platforms or protocols may suit different users’ preferences, goals, and risk appetite. However, some of the most popular and reputable ones include Compound, Aave, Celsius, BlockFi, Uniswap, PancakeSwap, and Polygon.

The amount of passive income you can earn with crypto depends on several factors, such as the amount of capital you invest, the type of method you choose, the market conditions, and the platform or protocol fees. Generally speaking, the higher the potential return, the higher the risk and volatility. You should always do your own research and due diligence before investing in any crypto project or platform.

Earning passive income with crypto can help you diversify your income streams, hedge against inflation, and grow your wealth over time. You can also take advantage of the high returns and low barriers to entry that crypto offers.

Earning passive income with crypto also comes with some challenges, such as volatility, security, regulation, and taxation. You should be aware of the potential pitfalls and protect your assets accordingly. You should also consult a professional advisor if you have any doubts or questions.

Read more:

• Want to maximize your crypto earnings in 2023? Here are the top 10 strategies for generating passive income
• Top 15 Crypto Brokers in 2023
• 10 Best Crypto Mining Platforms in 2023
• Best 17 Crypto Portfolio Tracker Apps and Builders in 2023