The cryptocurrency space suffered in 2022 as the world economy tumbled due to supply chain issues, the ongoing conflict in Ukraine, and soaring inflation rates. Many NFT projects disappeared; we even saw a crypto collapse when Luna crashed. Luna’s landing platform, Anchor, also went down when the entire blockchain was destroyed.
That said, there are still some ways to earn money from crypto investments as a long-term investor looking for passive income opportunities. There are still decent yields for staking your cryptocurrency, and you can theoretically make a continuous money stream from your work with NFT royalties.
- You can earn crypto royalties from NFT royalty programs, staking rewards, and lending.
- Investing in crypto is risky as it’s a volatile asset, but long-term investors can benefit from various royalty programs.
- You can earn passive income from lending your tokens to borrowers or by staking your crypto to verify transactions on the blockchain.
How can you earn money from crypto royalties?
In the cryptocurrency space, you can generate passive income from crypto lending and staking. Crypto lending is, as the name suggests, all about lending out your tokens to borrowers at an agreed-upon rate. Crypto staking is a bit different as it involves leasing your tokens to the blockchain to verify transactions.
Since no centralized bank controls everything and verifies transactions, companies use one of two mechanisms for verifying transactions on a cryptocurrency blockchain. Any blockchain that uses the proof-of-stake (PoS) mechanism allows for the staking of cryptocurrency to validate transactions on the network in exchange for rewards, which are usually a portion of that token.
Since the Ethereum merge led to a switch to the PoS system, you can stake your Ethereum tokens. You can also stake Cardano, Solana, and any other cryptocurrency that uses this mechanism. You can’t stake Bitcoin since they use a proof-of-work mechanism.
This article will consider crypto lending, crypto staking, and NFT royalty programs as options for making money as long-term crypto investors.
Crypto lending opportunities
In decentralized finance (DeFi), many financial products and services are built on a blockchain. DeFi differs from centralized banking because its foundation is peer-to-peer digital exchanges rather than centralized institutions like banks. One of the most popular DeFi services has become crypto lending.
You may have seen advertisements from crypto exchanges telling you how much you can earn through crypto lending. You can make money from crypto lending by depositing your crypto in a lending platform that turns around and loans your crypto to borrowers looking to secure cash loans using crypto holdings as collateral. In exchange for loaning your crypto out, you earn interest as you get paid back.
The amount you earn will depend on the platform, the type of cryptocurrency you’re lending out, and other possible market factors. We urge you to shop around different exchanges to see the rates different companies offer.
How to make money from crypto staking
One of the common ways to make money from crypto is through crypto staking, which involves giving your tokens to a blockchain so it can verify transactions.
How can you stake crypto? Here are the steps you’ll likely follow if this interests you:
- You must decide which cryptocurrency you want to invest in. Finding a coin you want to invest in that allows staking is important.
- Find the right platform. You want to find a crypto exchange that offers competitive rates and security.
- Deposit your crypto, and stake it for an agreed-upon time. When it comes to the verification process, it’s often wise to stake your crypto on an exchange where the exchange adds your tokens to a validator’s stash. This way, you earn a portion of the rewards generated from validating transactions.
Many people will use an exchange like Binance to stake their chosen crypto. The percentage yields change depending on market conditions.
There are two different kinds of staking: locked and DeFi. Locked staking means that you have to lock up your crypto for a time, usually 30 to 120 days. As the name suggests, the locked-in staking means you can’t access your crypto for that agreed-upon time.
DeFi staking has more to do with smart contracts and DeFi projects. If you try DeFi staking through a service like Binance, Binance won’t take responsibility for any security problems with on-chain smart contracts.
As we saw with what happened to Luna, it’s crucial that you only invest money that you can afford to lose when it comes to staking your crypto.
NFT royalty programs
NFT royalties allow you to earn a percentage of your sale price every time someone purchases your NFT project on a marketplace. Smart contracts complete the payments and can range from 5-10%.
NFT royalties don’t require an intermediary. They only need a smart contract executed on the blockchain; everything else is handled automatically.
These NFT programs have attracted many artists and folks in the digital creator space since they can earn money directly from their work.
So, for example, an artist could sell one piece of digital art or any kind of creative project once and then profit many times from it.
Let’s say that a customer purchases your NFT artwork and decides to sell it for profit in a few months since it was limited or the value increased for some reason. You’ll earn a royalty from that sale depending on the terms you’ve agreed to (anywhere from 5-10%). Then another six months later, as your reputation as an artist grows or the artwork becomes more valuable again, this person decides to sell. You’ll once again earn a royalty as stated in your terms.
The blockchain and smart contracts work hand-in-hand, so the rightful owner receives the payment once the transaction goes through.
These NFT royalty programs benefit both parties because the artist or creator of the original work is rewarded for their efforts, while the buyer rests easy knowing they’re purchasing an authentic version instead of a counterfeit.
How can you make money from NFT royalty programs?
While the idea of making money from NFT royalties sounds simple, the execution is where it gets challenging, as you have to create an NFT project that others want to purchase. Many musicians, artists, and digital creators are simply turning to NFTs because they already have an established audience looking to purchase from them.
You have to mint your NFT project on a marketplace for the public to be able to purchase it. The most popular NFT marketplace is OpenSea, which some have dubbed the “eBay of NFTs.” There’s also Rarible and Mintable.
What you need to know about crypto income
We want to stress that you must purchase the cryptocurrency coin before you can stake it or lend it. This indicates you’re taking two different risks to earn passive income since you’re not just putting cash in a savings account.
You must hope the coin’s price remains strong when it’s out of your hands. For example, if you lock your Solana in for 90 days but want to sell it because you notice that the price starts dropping, that’s not an option.
What should you consider before investing in crypto royalties?
It’s worth reminding you that investing in cryptocurrency can be very risky, and the market is filled with volatility. We also have to state that regulators in the US have heavily criticized these crypto-lending platforms. Before Luna crashed, its native lending platform offered interest rates that seemed too good to be true. In hindsight, this was the case, and the platform went down.
You must also remember that your money isn’t secured by federal insurance. First, you have to use your fiat currency to purchase the cryptocurrency. Then you have to lend it or stake it on a platform. You then have to hope this platform doesn’t become insolvent, making you lose your investment. There have been many horror stories of investors losing money when a platform fell. Investors have lost tens of thousands of dollars overnight due to crashes.
How should you be investing your money?
While many unique opportunities for generating passive income in cryptocurrency exist, risks are always involved.
New markets always carry an added level of risk as they find their footing. If you’re an investor with a shorter time horizon and lower risk tolerance, putting your money into a more established and secure investment might be a good choice. You shouldn’t invest any money in crypto you’re unprepared to lose.
The Bottom Line
If you want to generate passive income from cryptocurrency, many options are worth considering. Crypto lending involves giving your crypto tokens to people who wish to use them as collateral for a loan. You can earn interest on that loan. Crypto staking involves giving your tokens to a blockchain so they can use them in the validation process. This only applies to cryptocurrencies that use proof-of-stake. We urge you to take the time to conduct further research before you decide which investment to go with.
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