The secret of the referral flywheel is that it's a mechanism that turns active earnings into passive earnings. It's time intensive to earn from pages like firefaucet, cointiply and faucetpay. Getting referrals for these pages is also a rather difficult task. However, it's worth the effort if combined with the next part of the flywheel where we use this accumulated money and let it work for us.
Passive income and the risks
Before we go further, there are plenty of ways to generate passive income online but I'm trying to present you what I use myself. The reason why I use exactly this is because I don't need any third party to run it and also because the tokenomics of the underlying asset is one of the most stable in the crypto sphere. However, what I present here is what I'm doing. Don't consider it as investment advice and do your own research before investing.
Why Tron
The tron crypto currency ranks among the top 10 in terms of market capitalization. It's one of the most important currencies and it powers the Tron blockchain. There are two main reasons why I chose tron for my passive income strategy.
Stability and inflation
Contrary to most other currencies, the supply of tron doesn't grow over time. The costs of using tron are quite high and the tokens that are paid for transactions are burnt. The quantity of burned tokens corresponds more or less to the new mint. This means that the supply of tron is stable or even deflationary.
If users are active on tron, they need energy and bandwidth to use the chain. This can only be obtained by staking tron. Either people stake it themselves or rent out the necessary resources for their tasks. This means that with a stable supply, a big part of the tron tokens are actually staked and therefore not liquid on the market.
Price evolution
When looking at the price evolution of tron and comparing it with most other tokens, it doesn't really follow the ups and downs on crypto currencies. The trend is quite easily definable and it shows up.
Evolution of Tron prices. Source: Coingecko
Of course there is no guarantee that this will continue like that but I believe it gives a much bigger stability to the tron token and the chances are in my opinion quite high that this trend continues.
How to generate passive income with tron
What I like about my way to earn passive income with tron is that I need not to send my tokens anywhere to generate it. There are actually two income sources that compound.
Staking and voting
The first income source comes from staking my tron tokens. This is the exact same mechanism than is required to actually have energy and bandwidth to be active on tron. I simply need to vote for validators and I get a regular return for my tokens. This fluctuates between 3 and 4% APR.
Renting out energy or bandwidth
The second income source from my tron is to actually rent out my energy and bandwidth to other users. For that I use a service called catfee that allows me to delegate my energy or bandwidth to a vault. Catfee then sells these delegations to people needing it. I get direct payments from catfee in the form of Tron tokens. I can get somewhere between 8 and 12% on my energy and bandwidth.
Since I only delegate my stake, the tokens always stay in my wallet. The only risk that I have is that I don't get any return from my stake if catfee suddenly stops paying. Then I can simply undelegate and use my energy in another way.
The limits of this strategy
For this strategy to be worth it, it's necessary to work with a rather bigger sum. Transactions on Tron are not free and there is only a limited amount of free bandwidth available every day. Just about enough to make two transactions. This means that we need to be careful how we operate.
How to proceed
Create a wallet
For this to work, you need to install tronlink on your phone or your browser. This is a free wallet for Tron that is needed to use the blockchain. Generate a tron address that you will use for the withdrawals.
From your income of the referral flywheel, send tron to this address whenever you want. This won't cost you anything. Let the tron accumulate until you have at least 50 tron.
Stake your tokens
Use your tronlink to stake your tokens with version 2.0 for energy. In tronlink go then to vote and vote for one or several super representative that offers a high apr. You can do these two actions with the free bandwidth that you get with your account. From now on, voting rewards will be accumulating in your wallet.
Wait until you accumulate a decent amount of voting rewards before claiming them.
Delegate your tokens
Once you have accumulated around 1000 tron, you can start to delegate your stake out to catfee. To do that, select the vault on catfee that you want to delegate to and copy the tron address that is provided. In tron link resources, delegate your energy (or bandwidth) to the address that was given by catfee.
You can start delegating with smaller amounts but catfee pays you once you have collected 5 tron worth of rewards. From experience, it takes a lot of time to get that if your stake is too small.
Pay attention to fees
With your tron account for all these actions (staking, voting, delegating) you can pay with the free bandwidth that is provided with your account. It's about 600 a day that resets after 24 hours. However, with 600 bandwidth, you can do maximum 2 actions. So it's worth to space your actions out over two days if necessary to avoid needing to pay fees in the form of tron.
How much can you earn?
I try to take the earnings from voting and the income from catfee and reinvest it into more stake every month. I do it over the space of two days, to be able to make the transactions with the free bandwidth. I make about 3.5% from voting and 11.5% from delegating. By reinvesting every month, my APR is at around 16%. This is a bit variable because the return from catfee is variable and the payout intervals depend on the amount invested. The bigger your stake, the faster you can reinvest and increase the real apr thanks to compounding effects.
