There are many ways to make a profit from cryptocurrencies. You can buy, trade, and hold the right coins when their value increases, or you can use your computing power to mine them. However, there’s another, more passive way to earn money with crypto that fewer people know much about.
Crypto dividends are when you get paid for simply holding cryptocurrencies in a specific way. You can earn interest (dividends) on the crypto you already hold, adding a passive revenue source to your crypto portfolio. Here’s an explanation of crypto dividends and the highest-paying opportunities so that you can start earning crypto interest right away.
Many crypto networks want to incentivize users to hold their tokens in a predictable, long-term fashion. This can be for various reasons, including network stability and security. For example, networks that use the Proof-of-Stake consensus algorithm need many distributed users to hold tokens in order to ensure the security of the network, by “staking” their cryptocurrency on the network.
Crypto dividends are given in order to get users to do this more frequently. The name for similar staking processes can have different names on different networks. Essentially, if you decide to stake your crypto funds on certain blockchain networks, you’ll get paid for doing nothing.
However, you’ll need to commit them for some time period in order to gain interest. For example, the interest rates given below are for holding for 1 year. Also, note that this mechanism is different from the meaning of stock dividends in the traditional sense. The main risk when earning crypto dividends is that the price of the cryptocurrency itself may drop (or even go to zero) while you’re earning interest, meaning you lose money even if you earn interest in that particular currency.
The main difference between dividends and investing, mining, and trading is the amount of active effort required. Investing requires regular monitoring and reevaluation of your portfolio, mining requires maintaining physical equipment daily, and trading requires constant decision-making.
Crypto dividends, once set up, require almost no effort. This means it’s much more passive. However, as with all of the other types of investing, you still take on significant currency risk (the risk that the currency itself will lose value). In fact, crypto dividends have higher currency risk, as your funds cannot be traded as quickly.
For example, if you are staking AVAX, and the price drops fast, you may not be able to swap AVAX to ETH or something similar to avoid losses.
There are many networks that pay dividends as described above. However, for a variety of reasons, some pay significantly more than others. Here are 4 networks that currently pay some of the highest interest rates in the crypto world. Please note that these are interest rates before other fees (such as validator fees) that vary depending on your circumstances.
- Tezos (XTZ). You can earn approximately 6% yearly interest by “delegating” XTZ on the Tezos PoS network. There are also no freezing periods when delegating, so you can move your tokens as you please.
- Cosmos (ATOM). You can earn approximately 8-10% yearly interest by delegating ATOM tokens. Note that you have to choose the right validators in order to receive your rewards, and you’ll need to wait 21 days before you can receive your tokens back.
- Dash (DASH). You can earn about 7% yearly interest staking DASH. This blockchain rewards smaller stakes by allowing a maximum of 10 DASH tokens to be staked. You’ll need to stake for 30 or 90 days at a time to earn interest.
- Tron (TRX). You can currently earn about 7% yearly interest on TRX with the Tron network. This is done through the network voting system.
The specifics of staking/delegating are different for each of these networks. The easiest way to earn dividends is often through exchanges. You can essentially outsource this task in exchange for some of the rewards.
Crypto dividends are a fantastic way to add a new revenue stream to your crypto portfolio, as long as you manage the risks. If you’re already holding crypto tokens that can be staked safely, you’re almost turning down money if you don’t participate. Tezos, Cosmos, Dash, and Tron are fantastic places to begin earning high interest with crypto staking. Get started, and you’ll be one of the pioneers making a profit from this fascinating new passive income stream.