I’m a newbie in crypto investing and it’s definitely a rollercoaster ride and it’s definitely not for the faint of heart. Ups and downs sometimes go beyond 50% depending on the crypto that you choose. To minimize risks, I have decided to put some of my cryptos (that I intend to hold for mid or long-term) in various crypto investment features that will make them earn passive income. As months go by, I’m learning a lot of different ways how to earn passive income from crypto and I’m going to share with you guys my crypto passive income journey.
But before we begin, I just want to be clear that this is not financial advice and should not be treated as such. I’m just a newbie in crypto investing and I’m not a financial advisor. If you need any financial advice on any type of investment, please consult a professional financial advisor. And also, Do Your Own Research (DYOR).
Now, let’s go back to the topic…
Table of Contents
Staking on Exchanges
Staking is my favorite way to earn passive income from crypto. Staking is the process of participating in validating transactions for proof of stake (POS) crypto which means that not all crypto have staking options since not all use POS.
I only stake crypto that I’m planning to hold for quite some time and I often just stake for the shortest timeframe – 15 0r 30 Days. There are varying time limits to staking – 15, 30, 60, and 90 Days.
I also divide my holdings when staking because I noticed that every now and then, Binance will open a staking option with a higher APY. When a higher APY option becomes available, I usually redeem my currently staked crypto and transfer it to the new one with a higher staking reward.
Unlike the regular ‘Savings’ option, you cannot redeem it partially. After realizing that, I now divide my crypto holdings when staking.
The risk though in redeeming early is that I forfeit the initial interest earned but I figured that I would just earn it back and possibly more because of the higher APY for the new staking option.
Please be aware though that redeeming staked crypto will usually take 2 days. So, if you redeem today June 4, 2021, it will be unstaked on June 6, 2021. The date and time will actually appear on your screen before you confirm the redemption.
Let’s take $Matic (Polygon) as an example. As you can see, there’s currently an option to stake $Matic for 15 days and earn 43.29% APY interest. If I have staked all my $Matic in one go before this became available, then I don’t have any $Matic left to stake, unless, of course, I buy new $Matic on the exchange.
However, since I’m dividing my staked $Matic into batches, then I can just unstake one batchof my staked $Matic and re-stake it to the one that has a higher APY. This is just my personal strategy so don’t take this as a recommendation because we have varying risk appetites.
The higher APY staking option for $Matic only became available last June 1, 2021, and it’s on a first-come and first-served basis. The maximum number of $Matic that you can stake for this is also capped at 210 $Matic.
So, how do I divide my crypto holding when staking? For example, if I have 1000 $Matic then I will stake it in 5 batches on Binance.
So what I’ll do is stake 200 $Matic per batch. So if I do this, on my Binance ‘Earn’ page I will see 5 line items of staked $Matic containing 200 units of $Matic per line. These will earn 11.34% APY and will be locked for 30 days (plus 2 days upon redemption).
So, if ever a promotional staking reward that has a higher APY becomes available before my redemption period ends. I will just unstake one (out of the 5) of my currently staked $Matic and re-stake it to the one with a higher APY. By doing so, I don’t get to forfeit all the other interest earned by my other staked $Matic.
If you want to learn more about Binance Staking, you can check out their staking page here.
By the way, please be aware though that your staked crypto ($Matic in this example) is still subject to the fluctuation of the market price. For example, if you bought 1000 $Matic for $1/$Matic then your total investment is $1000. If the price goes higher or lower by the time you redeem or unstake your $Matic, then its dollar value will of course be different than what you started with.
Staking on Wallets
Aside from staking on exchanges, I also stake crypto on wallets. For example, $ADA can be staked on Binance and it can also be staked on their own wallet – Yoroi (for Mobile) or Daedalus (for Desktop).
So what I do to minimize my risk and at the same time earn passive income for holding $ADA is that I stake a portion of my $ADA on Binance and some on Yoroi.
Another reason why I don’t stake everything on Yoroi is that sometimes, there are better APYs on Binance.
I don’t have any multi-crypto wallets yet such as Trust Wallet, but I’ve read that you can also stake some crypto from there. I will probably download it in the future and I will write about it as well. I will just link it here once I’ve done so.
Crypto Exchange (Binance) Savings
I only use Binance for savings and I only use the Flexible Savings option as of the time being. I use this option to earn passive income from crypto that I’m planning to keep for a short time and also for crypto that doesn’t have any staking option.
The savings option in Binance has a lower interest compared to staking but it’s more flexible when it comes to redemption as you can redeem it anytime.
Actually, there are two options when redeeming – Fast and Standard.
As per Binance:
- “For standard redemptions, the full amount will be returned on the second day after redeeming at 00:00 AM (UTC). This also includes your earned interest. Any delay in funds credited may be due to the interest calculation process, as the day of redemption is included in the interest calculation period.”
- “For fast redemptions, you will receive the full amount of your digital assets back on the day of redemption without interest.”
You can learn more about it here.
Aside from Flexible Savings, Binance also has Locked Savings for Stable coins. I have not used this yet though. But for those who are planning to keep stable coins, this is the option for you. By the way, please bear in mind that the information provided here is subject to change, of course, so be sure to always check Binance for updated information.
I only use Binance Flexible Savings for now, but I will probably try the savings option in other crypto exchanges that I use in the future.
To maximize my earnings, I also put the crypto that I have earned from staking and Binance Savings back into savings, or I re-stake them if they qualify with the minimum required amount. I do this daily, so technically, it’s like compounding the interest manually.
Other Interest-Bearing Crypto Savings Account
There are other interest-bearing crypto savings accounts available in the market such as Nexo, Celsius, BlockFi, etc. I have not tried any of them yet, though I already have signed up with Nexo.
I will probably write a separate post once I’ve deposited some funds on Nexo or to any of them and I will link it here. Based on what I’ve read, the stablecoins interest rate is a bit higher than what is currently being offered on Binance.
Yield Farming Using Stable Coins
Personally, I do Yield Farming on Pancake Swap on Crypto – Crypto (e.g. $ADA – $BNB) or crypto – $BUSD (e.g. $CAKE – $BUSD) pairing because of the high APY. But recently, I’ve also considered farming using stable-stable pairing (e.g. $USDC – $BUSD) to diversify my portfolio and to minimize the risks of Yield Farming.
Note: (Update as of January 30, 2022) I have discontinued using Pancake Swap and Pancake Bunny since late last year (2021) but since I have not been able to update my blog for the last six months I’m just updating this now (01/30/2022). Please be informed that the information you see here might not be updated by the time you read this. Please DYOR and check Pancake Swap’s official website and social media channels for their most recent updates.
Yield Farming Using Single Assets
You can also do Yield Farming using single assets on a variety of AMMs available in the market. I only use Pancake Swap and Pancake Bunny at the moment and I can only talk about them. I will write about other AMMs once I have given them a try.
When you farm using single assets, you’re not subject to Impermanent Loss because you didn’t pair your crypto to another asset to create a liquidity pool token. But of course, your crypto is still subject to the fluctuation of its market price.
With Pancake Swap, you can stake $CAKE and earn $CAKE and a variety of other cryptos via the Syrup Pools.
With Pancake Bunny, I only stake $CAKE to earn $CAKE and $BUNNY and I also stake $BUNNY to earn $WBNB which I convert to $BNB once I harvest them and use to pay for my Pancake Swap and Pancake Bunny transactions.
Holding ‘Dividend’ Paying Crypto
There are some crypto that pay out ‘dividends’ when you hold them. An example of this is $VET. When you hold $VET in a savings account in Binance, you earn interest on your $VET and at the same time, you will also receive $VTHO.
I will research other cryptos that do something similar and I will write a separate article about it and link it here. I’m familiar with $VET because I used to have some on Binance and when I held $VET on my Binance Savings, I also received some $VTHO on a daily basis. It’s not that much but it does add up and it’s better than not to get any, right?
Airdrops by Holding a Crypto
Every now and then, airdrops are given to token holders of a particular crypto. In the past, I have received $DON for holding $IOST, $BEL for holding $ARPA, and $XYM for holding $XEM until the snapshot date.
It’s not that much but again, it’s better than not to get any, right? I don’t have any of these anymore since I usually convert to $BNB any small holdings that I have on Binance.
Crypto Exchange Referral Programs
You can also earn some crypto by referring people that you know to crypto exchanges. Technically, this is not really passive since if you’ll be referring your friends, you’ll have to talk to them to discuss this (active).
However, if you have a blog, social media account, or YouTube account and you’re enthusiastic and passionate about crypto, then you can just leave a link to your referral code every time you write an article about crypto so your readers can use them if they decide to sign up for an exchange.
It’s not a requirement though for any sign-ups but if you’re feeling generous, feel free to use any of my affiliate links on my Recommendations page. By the way, please Do Your Own Research (DYOR) before you sign up for any crypto exchanges, products, or services because crypto is very volatile.
Actually, always DYOR regardless of any investment (not just crypto) before you put any of your hard-earned money into any of them.
I only have one ‘crypto card’ as of now and I just got it recently. I signed up for a Crypto.com Ruby Steel Visa Card so I can take advantage of the crypto cashback and ‘free (or reimbursed in $CRO)’ Spotify account. I have not used it yet though. I will write another post once I get to try it (I just got it a few days ago).
If you’re interested in getting one – check out my post about it – How to Get a Crypto.com Visa Card.
As crypto becomes slowly adopted by more and more people around the world, there will be more opportunities to earn crypto passively in the future. I will update this post once I learn other ways to earn passive income from crypto.
By the way, as I always say, please do not treat this as financial advice (NFA) as I am just sharing my personal crypto investing journey. Always Do Your Own Research (DYOR) to ensure that you are well-informed in every decision that you make and to avoid losing your hard-earned money.
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