Wouldn’t it be nice to increase your crypto holdings with almost 0 efforts or just earn free crypto? Of course, who wouldn’t be interested in that! But many don’t know which options are available to do so. As we see now the rise of DeFi (Decentralized Finance) and also some new offers from other new players, I think it’s a good time to give an overview about what’s possible.
Let me walk you through the different options to earn passive income on your crypto or free crypto.
Lending
There are several options for earning passive income by lending your crypto.
Financial servicesCelcius Network and Blockfi are a new kind of financial service. They offer loans backed by crypto as collateral and, what’s more interesting if you want to earn passive income, they pay now interest for your crypto. If you want to earn interest, you send them your coins. Celsius pays interest after 1 week, Blockfi after 1 month, both in the deposited currency.
But how do they earn the interest? They lend your crypto to margin/short traders and pass a part of the interest they earn that way to you. If you lend them stable coins, they will also lend these coins to other users who take a loan.
**DeFi lending services**DeFi is the new crypto buzzword and stands for Decentralized Finance. More and more players like Compound or Dharma Lever come to the market and offer a decentralized way for lending your crypto and earning interest. These services offer a borrowing/lending market based on smart contracts running on Ethereum. The interest rate which is payed is determined by bid and ask.
If you want to earn interest, you send your crypto to their smart contract via their app interface and become a lender that way. On the other side there are borrowers which add collateral to the contract and are then allowed to borrow your crypto. Usually they do this for margin/short trading.
In the case of Compound, interest is payed after each ethereum block (currently about 15 seconds) and is directly added to your funds using an internal tx, so no GAS is needed. Interest is payed in the same currency like the one you lent.
**Lending bot services**Lending bot services like Cryptolend or Coinlend are not really new, but may be not that well known. They offer automated lending to margin/short traders on exchanges like Bitfinex or Poloniex. You don’t need to have any technical knowledge to use the bots or know anything about lending to traders. You just send your crypto to the exchanges and the bot does the rest.
You need to create specific API keys on the exchanges which the bot uses then for lending. Sounds spooky in the first step, but as these keys are limited to lending only and don’t grant the right to exchange or withdraw, this seems to be a safe solution.
Both services offer a free plan, so you only have to pay the fees charged by the exchanges for earning interest by lending. Interest is payed in the same currency like the one you lent.
**Exchange interest programs**Some exchanges offer interest programs to attract new users. Usually they pay a pretty good rate. One example is Bitrue which currently offers interest programs for XRP and some stable coins.
If you want to earn interest, you send your coins to their exchange and add them manually to the interest program. Interest is payed daily in the same currency like the deposited coins.
Bitrue earns the payed interest by lending the coins to margin/short traders on their exchange. Probably a part of the interest rate is sponsored by their marketing budget.
DPOS (Delegated-Proof-Of-Stake)
DPOS is nothing new, but may still be a bit unknown. There are several blockchains which use this variant of POS.
One example is Waves. You delegate/lend the staking power of your coins to a node of the Waves blockchain and earn passive income that way. Your lent staking power increases the probability that the node mines the next block which increases the mining fees the node earns. In return you are rewarded by the node. You will get a portion of the mining fees the node earned.
Rewards
The options mentioned above were all about earning passive income on your existing crypto. The rewards option is about earning free crypto without holding any crypto.
We see now more and more crypto reward programs coming to the market and I think, it’s just the beginning. These programs could really trigger the broader crypto adoption as they will reach a broad base of crypto newbies.
One example is Brave. Brave is a privacy focused browser which removes all ads and tracking scripts. But what’s more interesting, that you soon will be able to earn crypto (BAT) by watching ads. The ads will be displayed in a browser tab based on your browsing activity. The difference to targeted ads from Google, Facebook, etc. is, that Brave records and analyzes the activity locally in your browser. The ads feature is currently in beta and will be released later this year.
Another example is Lolli. Lolli rewards you with Bitcoin, if you purchase goods from their partner retailers.
Bottom line
All the mentioned options are a great way to earn passive income on your crypto or earn free crypto.
I prefer the passive income/lending options. When I tried to find a good offer myself, I found, that it’s pretty time consuming to find all the interesting ones and compare them. For that reason I just launched EarnCryptoInterest.com. Currently interest rates from 9 different providers for 42 currencies are listed. Rates are updated every 15 minutes. You select the currency on which you want to earn interest and get a list with APR offers.
That was it. Your feedback is of course very welcome and if you liked my article, a clap would be really nice!