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Ways of earning passive income in the DeFi sector

By Mchapeyama | CryptoSocial News | 29 Mar 2021


Passive income is an excellent way to supplement your money, no matter your circumstances. With several problems which affect pension schemes, the best opportunity to plan for retirement is to generate passive income.

One advantage of passive income is that you earn it even when you have your primary job. So, you have nothing to lose.

Passive income means a regular earning that a person has apart from wages, salaries and contract returns. Some popular sources of passive income include royalties and dividends. In most cases, passive income arises from an investment which someone has made. This article covers several ways to earn income passively in the DeFi ecosystem.

How to earn passive income?

We explore ways in which people earn passive income when dealing with cryptocurrencies.  One way of earning passive income is through staking cryptocurrencies.

Staking

Staking means locking or freezing some cryptocurrencies for a period of time and receive a reward for that. Many DeFi institutions allow people to stake their native tokens and earn interest. However, some exchanges such as BTC-Alpha allow people to stake a variety of cryptocurrencies. The return you get is charged annually, although you can accrue it monthly.

Liquidity provision

Providing liquidity is the second way which people earn passively. Usually, when you become a liquidity provider you contribute funds to a pair of cryptocurrencies such as ETH/UNI. You invest the same amount of money in each of the two coins or tokens. When you do that, you earn LP tokens.

However, the return your get depends on the performance of the tokens you have provided liquidity for. If the pair gets in a bullish trend you win, if it gets in a bearish momentum, you lose.

Mining

You can earn income from mining. However, since the mining equipment is expensive, many people choose to do cloud mining. This involves leasing some equipment which others or some companies have. To do so, you make a payment entitling to earn a return.

Lending

In this case, you lend some cryptocurrencies through some institutions such as NEXO. By lending out some cryptocurrencies, you earn monthly, at an established rate.

Some of these activities do not require much money to start. You may invest in the region of US$50, which is usually a once-off payment.

Conclusion

In all, there are several ways of earning passive income in the crypto world. All that you need to do is choose the best way.

 

 

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Mchapeyama
Mchapeyama

I am a blogger and writer


CryptoSocial News
CryptoSocial News

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