3 Ways to Earn Passive Crypto Income in 2022

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Are you earning interest on your crypto assets?

Key points

  • Staking, crypto lending, interest-bearing accounts, and yield farming all pay interest on crypto assets.
  • Different passive income options carry differing levels of risk.
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The ability to earn passive income is one of many attractive features of the cryptocurrency market. Investors can earn rewards on their cryptocurrency holdings in several ways, with varying degrees of risk and technical knowledge. Here are three ways crypto investors can earn passive income in 2022.

1. Staking

Staking is my favorite way to earn interest on crypto because it carries less risk than other options and is relatively easy to do. If your crypto exchange offers staking, you can activate this option at the click of a button. You might need to commit to stake your coins for a set amount of time.
If you can't stake coins with your crypto exchange, you might consider moving your assets to a wallet or platform that does offer this option. Staking can pay rewards of up to 15% APY or more, depending on various factors, such as the platform and the crypto. For example, I am earning around 10% APY on most of my stake-able assets.
Discover: Best places to buy bitcoin
More: Check out our updated list of best crypto apps including one offer with a $100 crypto bonus
Here's how staking works and why you can't stake every cryptocurrency.:
  • Proof of stake (POS): Some cryptocurrencies use a proof-of-stake system to keep the network secure. Proof of stake is a popular and more sustainable model than the one Bitcoin uses -- and you need a POS crypto for staking.
  • Validating transactions: Validators earn rewards for checking that new transactions are legitimate. In the proof-of-stake model, validators need to own a certain amount of the currency to participate.
  • Earning rewards: When you stake your coins, you're usually contributing to a validator node, and you earn a percentage of the rewards from that validator.

Staking risks

There are risks involved in staking. If you choose to stake your assets from a centralized exchange rather than a crypto wallet, there might be an increased risk of hacking. Plus, some networks punish validators who break the rules, so in the unlikely situation that you choose an unscrupulous validator, this could impact you.
But unlike many aspects of decentralized finance (DeFi) and crypto interest earning, you can see exactly how your rewards are generated. That means you can be more confident there's nothing dodgy going on.

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