Top five ways to earn passive income on your crypto assets
Don't just hodl your crypto assets, lend, stake, provide liquidity and earn yield on your assets
The arena of decentralized finance is often portrayed as fast-paced and a sector where experts who have learned the ropes target high speculative returns for their investments. Besides the constant chasing of gains through active trading, lending, swapping etc, investors who do not have the time and energy for active trading can as well explore these various time-tested strategies to earn passive income from the budding DeFi sector.
This is one of the most popular means of earning passive income on your crypto assets through supplying your crypto assets on lending protocols such as Aave, Compound and MakerDAO. Mimicking traditional financial bodies like banks and lending houses, Crypto & DeFi lending protocols allow anyone from anywhere to access borrow loans in the form of stablecoins or ETH and other crypto assets using smart contracts. Instead of just “holding” your crypto assets in your wallet without earning interests, you can lend it out to others looking to borrow and use it for their specific needs.
Using Frontier, anyone can natively connect to popular lending dapps like Aave, Venus etc., and either borrow or lend their crypto assets. See a guide on How to earn up to 20% APR by supplying crypto assets into AAVE using Frontier
Staking essentially means locking up your tokens in a smart contract and earning interest (most times in the same token from revenues earned by the network) on it. This is typical to opening a savings account in traditional finance but instead, this time, it is done on a blockchain network. With newer blockchain networks launching every now and then, the need to secure these networks through staking arises.
Instead of just holding your tokens in your wallets and expecting that they will appreciate at price over time, crypto and DeFi users can stake their holdings to help secure both established and newer blockchain networks to earn decent incomes.
Several validator pools exist which allows cryptocurrency holders to delegate their crypto as stakes without needing to pass through the rigour of having to set up their own nodes (a fairly technical process). With your crypto held in non-custodial wallets like Frontier and others such as Trust, Metamask, Rainbow, Argent etc., anyone can delegate their stakes to pools and earn attractive APR for the lock-up time their assets are held and used in securing any Proof-of-Stake or DPoS network.
Even more seamless, anyone can select from the list of pools across different chains using a single frontend — Frontier! From MATIC, BAND, BLUZELLE, HARMONY, KAVA, ZILLIQA to mention just a few, anyone seeking to earn passive income through staking can select from an exhaustive list of validators across different chains to stake their assets and earn up to 20% APR using Frontier’s intuitive and seamless mobile interface. Check out the following guides:
- How to stake $MATIC and earn up to 12% APR on Frontier
- How to stake $KAVA and earn up to 12% APR on Frontier
- How to stake $BLZ and earn up to 12% APR on Frontier
- How to stake $BAND and earn up to 12% APR on Frontier
- How to stake $ONE and earn up to 12% APR on Frontier
- How to stake $ZIL and earn up to 12% APR on Frontier
Since the recent DeFi run for the past two years, participants within this sector have been exposed to a newer way of trading/swapping their crypto assets without resorting to CEX platforms. While centralized trading platforms like Binance, Coinbase, FTX etc., adopts the order book system to match orders for their traders, DeFi unicorns like Uniswap, Sushiswap flips it right on its head by adopting an automated market maker (AMM) approach.
Using liquidity pools (essentially smart contracts) token pairs let’s say ETH/USDC pairs are supplied in equal amounts by liquidity providers (LPs) on DEXs and AMMs. This became the cornerstone of DeFi as we know it today. As LPs park their funds in liquidity pools to help DEX and AMM users easily swap tokens on them, they (LPs) earn a portion of the fees the DEX and AMM users pay to enjoy their services. Uniswap LPs earn 0.30% of the swap fees for any particular pool they fund, representing a cool way to earn passive income for LPs. Several other DEXs such as Sushiswap, dY/dX, Paraswap, Shibaswap, Quickswap, Plasmaswap etc. offer Crypto & DeFi users interesting opportunities to earn passive income through swap fees generated by these DEXs. See our guide on how to supply liquidity on Uniswap using Frontier
We described liquidity provision as one of the ways to earn passive income in crypto, most especially the DeFi sector. But beyond just earning from swap fees for supplying liquidity in DEXs and AMMs, LPs are exposed to opportunities of earning in the governance tokens of the DEXs and AMMs. as well. Unlike centralized exchanges run by individuals or entities, the operations of DEXs and AMMs are governed by decentralized entities using governance tokens. In this sense, yield farming involves providing liquidity to DEXs and AMMs in their governance tokens to earn from both fees and additional governance tokens.
In another sense, a DEX or AMM in exchange for LPs depositing their funds (majorly in stablecoins like DAI, USDC, USDT, TUSD etc) offer LP tokens - a derivative token that represents an LP’s share in the liquidity pool. These LP tokens are held in non-custodial wallets like Frontier (others include Trust, Argent, Metamask etc) with which the LP is connected to the DEX or AMM and can be further staked on other DeFi protocols like lending. This is the basis of yield farming where LPs further maximize their profits by farming existing crypto assets and farming new LP tokens as well
One of the biggest drivers of any successful crypto project is its community, which regardless of how innovative crypto & DeFi is may end up flopping. Airdrops was once upon a time a veritable growth hacking tool for crypto projects looking to amass huge followership and hence mass product usage.
Uniswap, a DEX unicorn rewarded its early adopters with UNI governance token in 2021 which was worth almost $1,600 at the time it airdropped these tokens in September last year. Even in 2021, airdrops are still proving useful to projects as well community members in crypto circles as a way of earning rewards and passive income. Ethereum Name Service (ENS) did an airdrop to its community members and only those who bought domain names with .eth were rewarded with some getting as high as $10,000 in November 2021.
As newer crypto projects spring up, the need for amassing large communities and subsequent product usage will always exist. Anyone looking to earn passive income through airdrops through being earlier of any protocol or dapp will need specific wallet addresses depending on the chain.
Frontier makes it easy for you to own different wallet addresses in one app whether the dapp or protocol is built on an EVM compatible chain or not. Simply download from Playstore or Apple Store and you can create new, import existing, connect to dapps and access multiple blockchains with one wallet interface.
Frontier is a Crypto & DeFi, NFT wallet where you can send, store & invest in 4,000+ crypto assets. Earn passive income on your crypto by staking or supplying assets in DeFi apps and exploring web 3.0 from a single place.
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