You may already hold some cryptocurrencies or tokens as a medium- or long-term investment. While you are waiting for the right time to sell your crypto assets for a profit, you can also earn passive income with them.
Let’s dive into several common ways to generate income with cryptocurrency holdings (these ways are available for everyone who has coins appropriate for a particular method of earning).
There are several staking coins by holding which in crypto wallets their owners can earn rewards. Staking yields vary among coins and staking systems, but usually the more coins you stake, the greater the chance of getting a reward. In most cases, in order to start staking, you need a minimum required balance of a cryptocurrency. Some coins are straightforward to stake. For instance, 1 ALGO (and more) in any of your non-custodial wallet is being automatically staked (currently, the annual reward is set at 5.32%). In relation to staking some other coins, more actions may be required. If you stake DCR solely, you need to use the Decred command line interface and keep your wallet running online 24/7; or, as an alternative, you can delegate this job to Decred’s voting service providers in consideration for a fee (0.4%-5% of the staking reward which is set at 6.81% per annum).
Keeping a wallet connected to the internet all the time can be challenging for many users. Given this, an attractive solution — the so-called ‘Cold Staking’ — was introduced by Callisto. Cold staking has nothing to do with PoS and implies freezing CLO coins in an offline wallet for at least 27 days that allows holders to earn rewards during this period.
Active User Reward is another mechanism of accumulating rewards with crypto holdings, implemented by Komodo. Any wallet address (whether it is online or not) storing at least 10 KMD will be earning rewards of up to 5.1% per annum provided a parament nLockTime is set. The rewards are intended only for ‘active’ users, which means that you need to move your KMD at least once a month in order to receive a steady income stream.
Running a masternode, based on the concept of staking, can be a more complex undertaking; however, it can bring more benefits (e.g., at the time of writing a SnowGem node has a yearly ROI of 25.5%, a Loki node — 24%, a Horizen Securenode — 16.7%). To operate a masternode, you need to lock a certain amount of coins (which may be rather significant) as collateral in a particular crypto wallet. This collateral is held in the wallet so long as you are operating the masternode. Suppose you host your masternode on your computer. In that case, you need to ensure your computer has a static IP address and a reliable internet connection (or to set up a server by yourself), so your wallet is always available online. Hence, sometimes it is more reasonable to pay for hosting a masternode on a VPS with support of configuration. Besides, a masternode requires regular maintenance and updates to ensure its smooth functioning. So, instead of enjoying passive income, you could end up being actively involved in all kinds of related technical aspects.
DeFi Yield Farming
To generate income with crypto holdings is also possible by participating in various DeFi applications. The most popular yield farming method is liquidity mining: users by providing liquidity to a particular pool (e.g., one of Uniswap or JustSwap) earn rewards in the form of liquidity pool tokens. Most commonly, huge amounts of these tokens are received by users who earlier than anyone else exploits a new DeFi’s potential or apply complex yield farming strategies. Moreover, DeFi tokens may quickly rise in value and just as quickly devalue — so don’t miss the opportunity to trade your tokens.
For example, the Sushi token price dropped from a high of $10.81 on September 1, 2020 to the lows of $0.6 (Defi project SushiSwap). Source: https://www.coingecko.com/en/coins/sushi
Crypto Trading Bots
You can potentially add value to your crypto holdings by using a crypto trading bot. It will place orders and execute trades repeatedly on your behalf based on a trading strategy (whether your own or obtained from the available sources), implementing technical analysis tools, and other pre-set conditions. Nonetheless, there is no guarantee that the bot will always be on the right side of the trade. Even if it is configured accurately and checked regularly, such trading is still subject to high risks due to the data, the bots usually cannot analyze properly (for instance, media hype).
Multicurrency Wallet with V-Staking
Nowadays, most crypto wallets allow their users only to hold digital assets. Vidulum offers a one-of-a-kind storage solution — a multi-asset web non-custodial wallet, based on a native blockchain and featured with V-Staking and masternode monitoring.
V-Staking is a process in which users earn daily VDL as a reward by just holding certain assets in their Vidulum App wallets, without the need to keep their wallets open all the time. It is similar to cold staking; however, unlike it, you do not need to lock your funds for a certain period. VDL is a native coin of the Vidulum App which can also be earned by mining or operating a masternode (with collateral of 15,000 VDL = approx. $295), or be traded on crypto exchanges.
To start V-Staking, users need to hold a minimum amount of a V-Staking asset (10+ coins for ZCoin, 100+ coins for the others). The amount of rewards is calculated based on the user’s share of the asset pool being used for V-Staking.
At the moment, the Vidulum App supports 30 cryptocurrencies, 4 of them are enabled for V-Staking on a regular basis, and some of them (currently 10 coins) are enabled for a limited time as a bounty.
Cryptocurrencies currently available for V-Staking. Source: https://wallet.vidulum.app/rewards
Other key advantages of the Vidulum App:
- Full control of the private keys of all stored assets with a possibility to export them;
- User-friendly graphic interface for users at any skill level;
- Accessibility through all devices connected to the internet (including Android and iOS);
- No fees (except regular transaction fees) for sending or receiving digital assets through the App;
- Non-custodial tip bot available for Discord servers.
It is needless to say about the convenience of a good multi-asset wallet, especially when it allows its users not only to set aside their assets in expectation for their price to surge but simultaneously to make a profit.
As we have considered, there are plenty of ways to brighten up the crypto holder’s life by putting his crypto assets to work. Some income schemes (such as staking coins or V-staking) usually do not need much of an effort. Others can be more difficult to manage, and their success often depends on the appropriate strategy, which with the right timing, may result in a more decent income. Anyway, wealth does not come completely free of charge, and with this in mind, everyone should do his own research, choose his only way to grow his crypto holdings and never put in crypto more money than he is ready to lose.