Why You Should Consider Alternative Passive Income Streams As A Crypto Investor

The crypto market can be very crazy. Today you are cashing out big time, and the next day, you could be all to nothing. A recent and trending case study is the Terra Luna massive crash in which many crypto enthusiasts and investors lost huge sums of money.

LUNA was among the top 10 cryptocurrencies at the time before the incident. While the crash details are not our concern, you must understand that you cannot trust the crypto market. Even if Elon Musk is the owner of the crypto/token you plan to hodl, you must hodl with your eyes open.

That said, this article introduces you to several relevant reasons why you should not rely entirely on trading cryptocurrencies; and why you should try out alternative crypto investments other than trading on centralised or decentralised exchanges.

Why you must not rely entirely on cryptocurrency trading Here are some relevant reasons you should reconsider spending your entire time, energy, and resources trading cryptocurrencies on CEXs or DEXs.

1. The crypto market is unregulated The crypto market is vulnerable to extreme prices—and no one, not even Satoshi Nakamoto, can regulate it. A contributing factor to these extreme prices is market sentiments (greed and FUD) and the ease of access to assets. Because it is easier to access your assets, you may, out of panic, withdraw your holdings at a loss or profit.

2. Too many fees apply Centralised and decentralised exchanges (CEXs and DEXs) primarily generate revenues through fees. For centralised exchanges, it could be spreads, trading fees, or in-house fees from product usage or sales. For DEXs, it could be through gas fees or liquidity pools. Whatever option you choose, you’ll always arrive at a fee. Depending on the market or network conditions, the fees could be outrageous and affect your net income.

3. Requires expertise, time, and energy Trading digital currencies or even digital stocks requires expertise, time, and energy. Else you could spend the whole day at a loss or win depending on how favourable the market is that day. We could employ the time, energy, and resources to trade cryptocurrencies for other profitable activities or personal development.

Alternative crypto income streams to consider After looking at the above reasons to consider alternative crypto-based income streams, here are a few suggestions to grow the portfolio in the cryptoverse.

Staking Staking is popular with Proof of Stake (PoS) protocols or networks, such as Cardano, Binance, Solana, Tezos, Tron, etc. It is less energy and resource-intensive—requiring using only your asset to validate transactions on the protocol. You could earn adequate rewards when you successfully participate in staking.

Yield Farming Yield Farming is similar to staking, only that it runs a special smart contract for the protocol. In yield farming, you supply collateral or liquidity to facilitate lending and borrowing using liquidity pool (LP) tokens. At the end of the day, you smile at an ample interest rate.

NFT trading Trading NFT is quite different from trading cryptocurrencies on CEXs and DEXs. Although, it may not be as lucrative as normal crypto trading in a P2P, CEX, or DEX. NFT trading, like many other blockchain creations, has created passive income for creators through royalties or connections on social media.