Cryptocurrencies have gained popularity recently, and it is not surprising. According to CoinMarketCap, the capitalization of cryptocurrencies in 2023 is over $1.33 trillionwith a projected increase to $1.9 trillion by 2026.
Despite growth, the digital asset market often brings unpleasant surprises to investors, such as sudden exchange rate crashes, token speculation, and scammers. However, this does not mean that you cannot earn in cryptocurrency without taking risks. In this article, we will discuss the The three main ways to earn passive income. in Bitcoin, Etherealand USDT which are suitable for both beginners and those already familiar with the industry.
1. Liquidity mining
Liquidity mining is when cryptocurrency holders temporarily transfer their assets to decentralized exchanges (DEXs) in exchange for rewards. These rewards are generated from the fees charged to traders who trade cryptocurrencies on the exchanges. User assets are stored in secure and encrypted liquidity pools.
How can you win?
To avoid risks, beginners often choose liquidity mining with a stable interest rate. This is an improved version of classic liquidity mining, where the profitability of the pools is always the same. Although this means that stable liquidity mining does not provide extraordinary profits, it does not reduce returns to zero either.
One of the most popular platforms for stable liquidity mining is wixpool. This is an open liquidity mining protocol that combines private cryptocurrency users into pools, providing liquidity to 300 leading DEXs, including Uniswap, Curve Finance, PancakeSwap, DODO, Jupiter, and others.
Wixpool is popular due to its fully automated Investment: Using a smart contract, the platform distributes cryptocurrencies to liquidity pools, stabilizes returns, collects rewards from exchanges, and directs them to user balances.
How much can you earn?
The Average Annual Percentage Yield (APY) for liquidity mining depends on the platform. On average, the platforms offer 30%-200% APY to provide liquidity to a pool of collateral. However, it is worth noting that not all platforms offer services with a stable interest rate, so it is important to carefully study all the conditions before choosing.
2. Stakeout
Staking is a way to earn passive income from cryptocurrencies using proof-of-stake (PoS) consensus. The essence of staking is to lock a certain number of tokens in a wallet in order to keep the PoS blockchain of the given asset operational and receive a reward for it. This method is mainly suitable for Ethereum.
How to get?
There are several ways to earn from Ethereum staking. The first and most expensive is to launch your own validation node on the Ethereum network. To do this, you can use the staking launch pad website. You must have at least 32 euro on your balance, which is approximately more than $50,000. This method is only suitable for investors with large portfolios, but the profit is the highest.
The second option is to use the services of providers. One of the most popular providers for staking is coin base. Users can choose between different rate plans, which grant different interest rates depending on the period of time they wish to lock their funds. For example, a user can stake their ETH for 1 month, 3 months, or 12 months. Each rate plan provides its own level of profitability.
It is important to note that the participation service is only available for certain cryptocurrencies that use the Proof-of-stake consensus, like Ethereum. Additionally, Coinbase does not guarantee interest rate stability, so rewards may change over time.
How much can you earn?
By launching your own node, you can earn up to 250% annual return, but only with new and sufficiently risky tokens. By working with vendors, you can earn up to 170% annual return.
Important- By law, US users who receive more than $600 in gambling rewards must complete Form 1099-MISC and must report their income from gambling rewards to the tax authorities.
3. Algorithmic trading
Algorithmic trading is when bots trade cryptocurrency for you. Trading bots are programs that buy and sell cryptocurrency on exchanges 24/7 using preset algorithms. Thanks to this, trading bots can quickly react to changes in market conditions and make instant decisions on buying or selling cryptocurrencies.
How to earn money?
To earn money, you need to install one of these bots and set up trading conditions. For example, set up automatic trade placement to buy ETH when the price drops 10%. To get started, you should have a good understanding of crypto trading theory and have minimal experience in successful freelance trading.
One of the most popular brokers for automated trading is IG group. It is a platform for testing and automating algorithmic trading strategies with a full range of advanced trading technologies, online brokerage services, and education.
Using IG Group, merchants can customize your bots, search for business opportunities, place orders and manage your accounts. Trading conditions may vary depending on the specific securities and futures being traded and the broker used.
How much can you earn?
The profit depends on two things: a) the luck you have in the market; b) how well you programmed the bot. In case of success, automated trading can provide stable profits of up to 300% APY. On failure, you can gain 0% or even go negative.
Conclusion
Cryptocurrencies provide many opportunities to earn, and we have looked at the three most popular ways. However, each of them has its advantages and disadvantages, as well as its level of risk. For example, liquidity mining allows you to earn steadily, but the rates are not as high as in other options. Betting on Ethereum can yield huge returns, but only for investors with large portfolios. Automatically trading cryptocurrencies is a quick way to make a lot of money, but it comes with great risks.
We hope this article has helped you better understand how to make money with cryptocurrency. Investing in cryptocurrency is a complex and risky way to earn money, but it can also generate significant profits. We wish you luck in your investment and hope you make a smart decision that meets your needs and abilities.
