A good advise I would like to share with everyone new to crypto investment or passive income generation is never to put all your eggs into one basket. Sure when things are good, everything is rosy and dandy. But then things does south and it often happens in the cryptosphere, that is when everyone panics and make very rash decisions. And that would very likely let to disaster. That is why I never put all my eggs into one basket. When I invest, I throw into a good number of different strategies. These range from old old crypto trading in the exchanges, putting cryptos into lending platforms, doing staking with my cryptos, small scale mining in pools, mobile “mining” and even joining cloud mining groups. I even put a small amount into those unknown coins in the hopes that it will one day explode for me to cash out.
For those who like to YOLO, I would recommend you to make sure you have a backup plan. YOLO on the crypto world is rather dangerous to say the least. You will never know if one day Elon Musk will start attacking your DOGECOIN which you have put your life savings into or that one day some government institution decided that BTC is a threaten to their banking monopoly and decided to ban Bitcoin mining as an excuse. These things do happen on a regular basis.
Here are some of the my passive income strategies.
- Good old crypto trading – I put a portion of my salary every month into buying crypto in the hopes that they will rise in price. In most cases I will hold them for the long term. Note that unless it is currently a bear market, “long term” would mean a few months at most. Yes I have a few tokens which I am very bullish about their future but for most cases I will only hold for a few months at most. However if you are a good trader and would be willing to spend a considerable amount of time looking at charts, buying and selling crypto could possible make you some consistent money. But for me, I think it is still a bit too much work, especially for a small time trader like myself. I usually trade on Binance. You can follow my step by step guide on how to buy your first crypto on Binance here.
- Staking – As I mentioned above, there are a few tokens which I am extremely bullish about. Some of which we are able to stake the tokens. Basically this means that you help to secure the network with the staked tokens and in return more tokens will be rewarded to you. These usually have a “lockup” period where the tokens cannot be used and in the end of the lockup period, you will get tokens back. I currently am staking ADA and CAKE tokens. Their returns are quite good as well.
- Lending platforms – I have a few tokens in various “centralized” lending platforms – namely Nexo and Celsius[referral link included]. These tokens will generate me passive income as interest rates. The tokens I deposit into lending platforms are then used to lend to borrowers who pay interest rates and part of which is given to the person who deposit into the platform. However note that if you are more into trading, it might not be a good idea to keep on transferred tokens from one wallet to another as there are transfer fees involved. And some transfers take a long time. However some of the stablecoin interest rates are as high as 12% APY. And even other altcoins, their interest rates are way better than if you keep funds in most banks. Yes, I do keep my tokens on two different lending platforms – Nexo and Celsius. It is also a good idea to compare the different rates between them. Note that there are also decentralized DeFi platforms like AAVE on which to earn interest on. Some of which are very interesting.
- Mining – For me, mining forms a pretty small portion of generating passive income. This is because I have only like 3 rigs to do mining. However they are still sources of passive income. I am estimating about USD4-5 per day. That works out to be about USD 150 per month. I mean it is certainly not the greatest but at least I am putting my computer to work right? Check out my blog post on my rig mining adventures here. I usually mine Ethereum on Nicehash and Monero.
- Cloud mining – These are perhaps better described as buying hashpower or buying hashrates. So you pay for the hashrate while the provider will do the mining for you. The equipment, space and electricity is all handled by the provider. Yes I am not making like 100% returns in profits but at least my money is not sitting ideal in the bank with 0.3% interest rate. Risk of course includes the provider shutting down or the country in which the provider is operating in decides to ban mining (like China).
- Liquity Provider – This is a higher risk investment to get passive income. What you do is add two tokens into a liquidity pool and the tokens are used for trading in decentralized exchanges like UNISWAP or PANCAKE SWAP. In return you get a cut of the exchange fees. However there is a big risk called impermanent loss and can be quite substantial if there are major price swings when the liquidity provider takes out his/her tokens from the pool. So please be careful when joining such a pool. Please have a look at my blog on being a liquidity provider here.
- Mobile Crypto Mining – Yes those little apps on the phone which users have to tap like once per day to get tokens. I am not very bullish on their prospects but if a least one or two of such projects were to succeed, surely there will be some returns. Just spend like 5 seconds of your time daily to tap and hope one fine day the tokens will be worth something. The more popular of such applications are the Pi Network and Bee Network.
Before we go, I need to reminder readers that I am no financial advisors. This blog is about information and is meant to educate readers to what is happening in the crypto world. You should always do your own research!
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