Crypto Royalty: How to Earn Long-Term Income from Crypto Investments
The cryptocurrency space suffered in 2022 as the world economy slumped due to supply chain issues, the ongoing conflict in Ukraine, and soaring inflation rates. Many NFT projects disappeared; we even saw a crypto collapse when Luna crashed. Luna’s landing platform, Anchor, also went down as the entire blockchain was destroyed.
That said, there are still some ways to make money from crypto investments as a long-term investor looking for passive income opportunities. It is still decent returns for staking your cryptocurrencyand you can theoretically get a continuous cash flow from your work with NFT royalties.
Important takeaways
- You can earn crypto royalties from NFT royalty programs, stake rewards and lending.
- Investing in crypto is risky since it is a volatile asset, but long-term investors can benefit from various royalty programs.
- You can earn passive income from lending tokens to borrowers or by staking crypto to confirm transactions on the blockchain.
How can you make money from crypto royalties?
In the cryptocurrency area, you can generate passive income from crypto lending and betting. Crypto lending is, as the name suggests, about lending your tokens to borrowers at an agreed interest rate. Crypto staking is slightly different as it involves leasing tokens to the blockchain to verify transactions.
Since no centralized bank controls everything and verifies transactions, companies use one of two mechanisms to verify transactions on a cryptocurrency blockchain. Any blockchain that uses the proof-of-stake (PoS) mechanism allows the staking of cryptocurrency to validate transactions on the network in exchange for rewards, which are usually part of that token.
Since the Ethereum merger led to a transition to the PoS system, you can stake your Ethereum tokens. You can also bet Cardano, Solana and any other cryptocurrency that use this mechanism. You cannot stake Bitcoin as they use a proof-of-work mechanism.
This article will review crypto lending, crypto betting, and NFT royalty programs as options for making money as long-term crypto investors.
Crypto lending opportunities
In decentralized finance (DeFi), many financial products and services are built on a blockchain. DeFi differs from centralized banking because its foundation is peer-to-peer digital exchanges instead of centralized institutions which knocks. One of the most popular DeFi services has become crypto lending.
You may have seen ads from crypto exchanges telling you how much you can earn through crypto loans. You can make money from crypto loans by depositing crypto into a lending platform that flips and lends crypto to borrowers who want to secure cash loans using crypto holdings as collateral. In exchange for lending out your crypto, you earn interest as you get paid back.
The amount you earn will depend on the platform, the type of cryptocurrency you lend and other possible market factors. We encourage you to shop around at different exchanges to see the prices different companies are offering.
How to make money from crypto staking
One of the common ways to make money from crypto is through crypto staking, which involves giving your tokens to a blockchain so that it can verify transactions.
How can you bet crypto? Here are the steps you are likely to follow if this interests you:
- You need to decide which cryptocurrency you want to invest in. Finding a coin to invest in that allows staking is important.
- Find the right platform. You will find a crypto exchange that offers competitive prices and security.
- Deposit crypto and bet it at an agreed time. As for the verification process, it’s often a good idea to stake your crypto on an exchange where the exchange adds your tokens to a validator’s stash. In this way, you earn part of the rewards generated from validating transactions.
Many people will use an exchange like Binance to stake their chosen crypto. The percentage return changes depending on market conditions.
There are two different types of staking: locked and DeFi. Locked stake means you have to lock your crypto for a period of time, usually 30 to 120 days. As the name suggests, the locked-in stake means that you will not be able to access your crypto at the agreed time.
DeFi staking has more to do with smart contracts and DeFi projects. If you try DeFi staking through a service like Binance, Binance will not take responsibility for any security issues with smart contracts on the chain.
As we saw with what happened with Luna, it is crucial that you only invest money you can afford to lose when it comes to betting crypto.
NFT royalty programs
NFT Royalty allows you to earn a percentage of your sale price every time someone buys your NFT project on a marketplace. Smart contracts complete the payments and can vary from 5-10%.
NFT royalties do not require an intermediary. They just need a smart contract executed on the blockchain; everything else is handled automatically.
These NFT programs have attracted many artists and people in the digital creative space since they can earn money directly from their work.
So for example, an artist can sell one piece of digital art or any creative project once and then earn many times over from it.
Let’s say a customer buys your NFT artwork and decides to sell it for a profit in a few months since it was limited or the value increased for some reason. You will earn royalties from those sales depending on the terms you have agreed to (anywhere from 5-10%). Then another six months later, as your reputation as an artist grows or the artwork becomes more valuable again, this person decides to sell. You will in turn earn a royalty as set forth in your terms.
Blockchain and smart contracts work hand in hand, so the rightful owner receives the payment when the transaction goes through.
These NFT royalty programs benefit both parties because the artist or creator of the original work is rewarded for their efforts, while the buyer has peace of mind knowing they are buying an authentic version instead of a fake.
How can you make money from NFT royalty programs?
While the idea of making money from NFT royalties sounds simple, the execution is where it becomes challenging, as you need to create an NFT project that others want to buy. Many musicians, artists and digital creators turn to NFTs simply because they already have an established audience that wants to buy from them.
You need to stamp your NFT project on a marketplace for the public to buy it. The most popular NFT marketplace is OpenSea, which some have called the “eBay of NFTs.” There are also Rarible and Mintable.
What you need to know about crypto income
We want to emphasize that you have to buy the cryptocurrency coin before you can bet it or lend it. This indicates that you are taking two different risks to earn passive income since you are not just putting money in a savings account.
You have to hope that the coin’s price remains strong once it is out of your hands. For example, if you lock up Solana for 90 days but want to sell it because you notice the price starting to drop, that’s not an option.
What should you consider before investing in crypto royalties?
It is worth reminding you that investing in cryptocurrency can be very risky and the market is filled with volatility. We must also state that regulators in the United States have strongly criticized these crypto lending platforms. Before Luna crashed, its native lending platform offered interest rates that seemed too good to be true. In retrospect, this was the case, and the platform went down.
You also need to remember that your money is not backed by federal insurance. First, you need to use your fiat currency to buy the cryptocurrency. Then you have to lend it out or stake it on a platform. You then have to hope that this platform does not become insolvent, causing you to lose your investment. There have been many horror stories of investors losing money when a platform went down. Investors have lost tens of thousands of dollars overnight due to crashes.
How should you invest your money?
While there are many unique opportunities to generate passive income in cryptocurrency, there is always risk involved.
New markets always have an additional risk when they find a foothold. If you are an investor with a shorter time horizon and lower risk tolerance, it may be a good choice to put your money in a more established and secure investment. You should not invest money in crypto that you are not prepared to lose.
The bottom line
If you want to generate passive income from cryptocurrency, there are many options worth considering. Crypto lending involves giving your crypto tokens to people who want to use them as collateral for a loan. You can earn interest on that loan. Crypto staking involves giving your tokens to a blockchain so they can use them in the validation process. This only applies to cryptocurrencies that use proof-of-stake. We encourage you to take the time to do further research before deciding which investment to go with.
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