{"version":"https://jsonfeed.org/version/1.1","title":"Stephen Ajulu","home_page_url":"https://ajulu.netlify.app/","feed_url":"https://ajulu.netlify.app/tags/passive-income/feed.json","description":"Hello, I'm Stephen Ajulu, a seasoned multidisciplinary tech professional with over a decade of experience. I build impactful solutions using design, tech, and engineering in the pursuit of impact.","icon":"https://ajulu.netlify.app/images/me.jpg","authors":[{"name":"Stephen Ajulu","url":"https://stephenajulu.com","avatar":"https://ajulu.netlify.app/images/me.jpg"}],"items":[{"id":"https://ajulu.netlify.app/posts/don-t-just-hodl-crypto-make-money-while-you-sleep-with-it/","url":"https://ajulu.netlify.app/posts/don-t-just-hodl-crypto-make-money-while-you-sleep-with-it/","title":"Don't Just HODL Crypto Make Money While You Sleep With It","summary":"Passive income is money generated from ventures in which an individual is not actively involved. For the most part, all you need to do is invest your money or digital assets in a particular crypto investment strategy or platform and watch it generate profit. In some cases, the earnings are fixed and predictable. In others, several factors beyond your control may come into play.\nA typical way many try to make a return in crypto with little to no involvement is through buying and holding crypto – also known in the industry as “HODLing.” This means an investor is prepared to purchase a digital asset with the mindset that its price will hopefully rise significantly sometime in the future. Such investors are ready to go the distance as this long-term strategy might require them to hold their positions anywhere between six months to five years. Through the duration of this investment, an investor does not have to be proactive in the crypto market. They only need to buy the digital asset and store it in a secure wallet – preferably a non-custodial wallet.\n","content_html":"\u003cp\u003ePassive income is money generated from ventures in which an individual is not actively involved. For the most part, all you need to do is invest your money or digital assets in a particular crypto investment strategy or platform and watch it generate profit. In some cases, the earnings are fixed and predictable. In others, several factors beyond your control may come into play.\u003c/p\u003e\n\u003cp\u003eA typical way many try to make a return in crypto with little to no involvement is through buying and holding crypto – also known in the industry as “HODLing.” This means an investor is prepared to purchase a digital asset with the mindset that its price will hopefully rise significantly sometime in the future. Such investors are ready to go the distance as this long-term strategy might require them to hold their positions anywhere between six months to five years. Through the duration of this investment, an investor does not have to be proactive in the crypto market. They only need to buy the digital asset and store it in a secure wallet – preferably a non-custodial wallet.\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eA wallet is a device or app where you can store a special key (private key) that gives access to your cryptocurrencies. The non-custodial variants let you store the private key in your personal devices, including a computer, mobile phone, or purpose-built wallet devices. With this, you have complete control over your private keys and, ultimately, your digital assets. By comparison, with a custodial wallet, a third party controls your private keys.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eHowever, simply buying and holding a crypto asset for any length of time does not guarantee you will make a profit. In fact, it’s very possible you could lose money. As such, exclusively HODLing crypto cannot be considered a truly passive income generator.\u003c/p\u003e\n\u003ch3 id=\"proof-of-stake-pos-staking\"\u003eProof-of-stake (PoS) staking\u003c/h3\u003e\n\u003cp\u003e\u003ca href=\"https://stephenajulu.com/blog/what-is-proof-of-stake-proof-of-stake-explained/\"\u003eProof-of-stake\u003c/a\u003e is a type of blockchain consensus mechanism designed to allow distributed network participants to reach an agreement on new data entering the blockchain. Note that blockchains enable open and decentralized networks where participants contribute to governance and processes involved in validating transactions. This is critical because such a community-focused approach eliminates the need for central authorities like banks. In most cases, blockchains randomly pick participants, elevate them to the status of validators, and reward them for their efforts.\u003c/p\u003e\n\u003cp\u003eThe systems used to pick validators vary from blockchain to blockchain. Some blockchain networks require users to deposit or commit their financial resources to the network. Here, the blockchain selects validators from a pool of users that have staked a specified sum of its native digital asset. In return, validators earn interest on the staked funds for contributing to the validity of the network. This validation mechanism is what is called proof-of-stake. It provides an opportunity for holders (those in it for the long haul) to generate passive income.\u003c/p\u003e\n\u003cp\u003eKnowing fully well that transaction validation might be technically tasking, you could opt for PoS blockchains that allow you to delegate your stakes to other participants who are ready to take up the technical requirements of staking. Understandably, the reward distributed to validators is slightly higher than that of a delegator. Some of the PoS blockchains you could consider are:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003ca href=\"https://www.coindesk.com/price/cardano/\"\u003eCardano\u003c/a\u003e\u003c/li\u003e\n\u003cli\u003e\u003ca href=\"https://www.coindesk.com/price/ethereum/\"\u003eEthereum 2.0\u003c/a\u003e\u003c/li\u003e\n\u003cli\u003e\u003ca href=\"https://www.coindesk.com/price/polkadot/\"\u003ePolkadot\u003c/a\u003e\u003c/li\u003e\n\u003cli\u003e\u003ca href=\"https://www.coindesk.com/learn/solana/\"\u003eSolana\u003c/a\u003e\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eFor even more convenience, you could adopt one of the several \u003ca href=\"https://defiprime.com/staking\"\u003estaking services \u003c/a\u003eavailable today. With these platforms, you can deposit a fraction of the number of digital assets required by the blockchain. For example, you normally have to deposit a minimum of \u003ca href=\"https://www.coindesk.com/how-does-ethereum-staking-work\"\u003e32 ETH\u003c/a\u003e on the \u003ca href=\"https://www.coindesk.com/tech/2020/07/24/everything-you-need-to-know-about-ethereum-20/\"\u003eEthereum 2.0 \u003c/a\u003eblockchain to become a validator. With a third-party Ethereum staking service, however, you could deposit as little as 5 ETH to start accruing interest.\u003c/p\u003e\n\u003ch3 id=\"interest-bearing-digital-asset-accounts\"\u003eInterest-bearing digital asset accounts\u003c/h3\u003e\n\u003cp\u003eHolders can take advantage of interest-bearing crypto accounts to earn fixed interest on their idle digital assets. Think of this as putting money in an interest-earning bank account. The only difference is that this service supports only crypto deposits. Instead of holding digital assets in your wallets, you can deposit them in these accounts and receive daily, weekly, monthly or yearly earnings, depending on the predefined interest rates. Crypto service providers that offer such products include:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003ca href=\"https://nexo.io/\"\u003eNexo\u003c/a\u003e\u003c/li\u003e\n\u003cli\u003e\u003ca href=\"https://celsius.network/\"\u003eCelsius Network\u003c/a\u003e\u003c/li\u003e\n\u003cli\u003e\u003ca href=\"https://swissborg.com/\"\u003eSwissBorg\u003c/a\u003e\u003c/li\u003e\n\u003cli\u003e\u003ca href=\"https://blockfi.com/\"\u003eBlockFi\u003c/a\u003e\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"lending\"\u003eLending\u003c/h3\u003e\n\u003cp\u003eLending has become one of the most popular crypto services in both the centralized and decentralized segments of the crypto industry. As an investor, you can lend your digital assets to borrowers for a chance to earn interest. There are four main lending strategies you could opt for:\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003ePeer-to-peer lending:\u003c/strong\u003e Platforms that provide such services enable systems that allow users to set their terms, decide the amount they want to lend and the interest they intend to generate on loans. The platform matches lenders with borrowers, similar to how P2P (peer-to-peer) trading platforms match buyers and sellers. Such lending systems provide users with a certain degree of control when it comes to crypto lending. However, you have to deposit your digital asset on the lending platform’s custodial wallet beforehand.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eCentralized lending:\u003c/strong\u003e In this strategy, you rely solely on the lending infrastructure of third parties. Here, the interest rates are fixed, so are the lock-up periods. Like P2P lending, you have to transfer your crypto to the lending platform to start earning interest.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eDecentralized or DeFi lending:\u003c/strong\u003e This strategy allows users to execute lending services directly on the blockchain. Unlike the P2P and centralized lending strategies, there are no intermediaries involved in \u003ca href=\"https://www.coindesk.com/defi-lending-3-major-risks-to-know\"\u003eDeFi lending\u003c/a\u003e. Instead, lenders and borrowers interact with programmable and self-executing contracts (also known as smart contracts), which autonomously and periodically set interest rates.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eMargin lending:\u003c/strong\u003e Lastly, you could lend your crypto assets to traders interested in using borrowed funds to trade. These traders amplify their trading position with borrowed funds and repay the loans with interest. In this case, crypto exchanges do most of the work on your behalf. All you need to do is make your digital asset available.\u003c/p\u003e\n\u003ch3 id=\"cloud-mining\"\u003eCloud mining\u003c/h3\u003e\n\u003cp\u003eUnlike the proof-of-stake mechanism explained earlier, some blockchains, including \u003ca href=\"https://www.coindesk.com/learn/what-is-bitcoin/\"\u003eBitcoin\u003c/a\u003e, opt for a more \u003ca href=\"https://www.coindesk.com/tech/2020/12/16/what-is-proof-of-work/\"\u003ecomputer-intensive approach\u003c/a\u003e where users need to prove the eligibility of their claim to become validators (more commonly called miners) by competing against each other to solve highly complex mathematical puzzles. This process is called \u003ca href=\"https://www.coindesk.com/learn/bitcoin-101/how-bitcoin-mining-works/\"\u003ecrypto mining\u003c/a\u003e. Due to the competitiveness of this consensus mechanism, miners have to invest in powerful computers and pay exorbitant electricity bills.\u003c/p\u003e\n\u003cp\u003eUndoubtedly, this venture is time-consuming and technical. And so, investors often opt for an alternate approach called cloud mining. With this, you can pay third parties to take up the technical aspect of crypto mining on your behalf. In essence, you pay a platform that offers such services a lump sum to rent or buy mining machines from their mining facilities. After this first payment, you might have to pay a daily maintenance fee so that the cloud mining service provider can help you manage your mining rigs.\u003c/p\u003e\n\u003cp\u003eAs exciting as this sounds, it comes with lots of risks. \u003ca href=\"https://www.coindesk.com/tech/2021/05/07/amazon-offers-mining-in-the-cloud-for-new-chia-cryptocurrency/\"\u003eCloud mining\u003c/a\u003e has been a subject of controversy ever since it became widely adopted. There have been several cases of scams due to the remote nature of this mining venture. Therefore, you should carry out due diligence before opting for this option.\u003c/p\u003e\n\u003ch3 id=\"dividend-earning-tokens\"\u003eDividend-earning tokens\u003c/h3\u003e\n\u003cp\u003eCertain tokens offer holders a fraction of the revenue of the company that issued them. All you need to do is hold the token, and you are automatically eligible to receive a certain percentage of the company’s revenue. The number of tokens you own determines the share of the revenue you would receive. An example of this is KuCoin Shares (KCS), where holders receive a daily share of transaction fees accrued by the KuCoin blockchain asset \u003ca href=\"https://www.coindesk.com/markets/2021/08/25/kucoin-launches-proof-of-work-mining-pool/\"\u003eexchange\u003c/a\u003e. The amount received is proportional to the amount of KCS tokens each holder stakes.\u003c/p\u003e\n\u003ch3 id=\"yield-farming\"\u003eYield farming\u003c/h3\u003e\n\u003cp\u003e\u003ca href=\"https://www.coindesk.com/defi-yield-farming-comp-token-explained\"\u003eYield farming\u003c/a\u003e is another decentralized, or \u003ca href=\"https://stephenajulu.com/blog/decentralized-finance-defined/\"\u003eDeFi, \u003c/a\u003emethod of earning passive crypto income. This is made possible by the dynamic operations of decentralized exchanges, which are basically trading platforms where users rely on the combination of smart contracts (programmable and self-executing computer contracts) and investors for the liquidity necessary to execute trades. Here, users do not trade against brokers or other traders. Instead, they trade against funds deposited by investors – known as liquidity providers – into special smart contracts known as liquidity pools. In turn, liquidity providers receive a proportional amount of trading fees from the pool.\u003c/p\u003e\n\u003cp\u003eTo start earning passive income via this system you first have to take up the role of a liquidity provider (LP) on a DeFi exchange such as Uniswap, Aave, or PancakeSwap.\u003c/p\u003e\n\u003cp\u003eTo start earning these fees, you have to deposit a specified ratio of two or more digital assets into a liquidity pool.\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eFor example, in order to provide liquidity to an ETH/USDT pool, you will need to deposit both ETH and USDT tokens into it.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eOnce you deposit liquidity, the decentralized exchange will transfer LP tokens representing your share of the total funds locked in the liquidity pool. You can then stake these LP tokens using supported decentralized lending platforms and earn additional interest. This strategy allows you to earn two separate interest rates from a single deposit.\u003c/p\u003e\n\u003cp\u003eThe crypto passive income opportunities listed in this guide are just some of the many ways you can make extra profit with your idle digital assets. Note that none of these opportunities are risk-free. Hence, it is advisable to carry out your own research, seek professional guidance from a qualified financial advisor, and determine what best suits your investment goals.\u003c/p\u003e\n\u003cp\u003eI\u0026rsquo;d like to introduce to you: \u003ca href=\"https://accounts.binance.com/en/register?ref=CL2JFAB6\"\u003eBinance\u003c/a\u003e.\u003c/p\u003e\n\u003cp\u003eThe best crypto exchange. \u003ca href=\"https://accounts.binance.com/en/register?ref=CL2JFAB6\"\u003eBinance\u003c/a\u003e has a specific feature known as the Binance Vault that enables you to earn passive income on the crypto you hold with relatively low risk. With Binance, you can just buy crypto, add it to your Earn Vault and sleep knowing your crypto is growing.\u003c/p\u003e\n\u003cp\u003eTo use this, kindly register with Binance using this link: \u003ca href=\"https://accounts.binance.com/en/register?ref=CL2JFAB6\"\u003eRegister With Binance and Get 20%\u003c/a\u003e\u003c/p\u003e\n\u003cp\u003eSource: \u003ca href=\"https://www.coindesk.com/learn/top-6-crypto-passive-income-generators-for-2021/\"\u003eCoinDesk\u003c/a\u003e\u003c/p\u003e\n","date_published":"2021-12-09T14:53:00+03:00","image":"https://ajulu.netlify.app/images/1_cc8xg5pc8lf5id8u_vu0fw.jpeg","tags":["finance","technology","staking","lending","lenders","cryptocurrencies","crypto","cryptocurrency","passive income","fire","financial freedom","assets","defi","decentralizedfinance","mining","yield farming"]}]}