Cryptocurrency has dominated headlines this year. Of course, it’s because President Trump signed the executive order to include cryptocurrency in the investments in 401(k) retirement accounts.
It isn’t surprising that investment in crypto is rising. A report shows that 55 million people in the U.S. now hold crypto. Gen Z investors, in particular, are crazy about crypto. They are allocating 4 times more capital to cryptocurrency.
It’s easy to see why. Cryptocurrency diversifies portfolio, offers a hedge against inflation, and the potential for return is also high. Holding crypto isn’t the only way to benefit from it, however. You can actually put your digital assets to work and earn passive income. How? We’ll share that here.
#1 Lock Up Cryptocurrency in a Blockchain Network
This one’s called staking, and it’s probably the most straightforward way to earn passive income with crypto.
Locking up your cryptocurrency in a blockchain network is often compared to a savings account. You agree to lock up your crypto for a certain period. This helps a blockchain network run its operations and stay secure. In return, the network rewards you.
This process is a key part of what is called the “Proof-of-Stake” (POS) system. It’s a model where users, called validators, lock up their crypto as collateral to verify transactions and create new blocks. The more crypto a validator stakes, the higher their chances of being chosen to validate a new block and earn rewards.
While you can stake with any coin, investors’ confidence is growing in Ethereum. In June this year, over 34.6 million Ethereum, worth nearly $90 billion, was locked in Ethereum’s PoS system. That’s a record high. According to Bit Digital, Ethereum staking generated $560,641 in revenue between December 31, 2023, and March 31, 2025.
So, if you’re seeking a straightforward entry into crypto passive income, staking remains one of the most reliable starting points.
#2 Lend Into Various Decentralized Finance Protocols
Decentralized finance, or DeFi, is a new type of financial system. DeFi lending allows you to be your own bank. Instead of putting your money in a traditional bank for a small return, you lend your crypto directly to others. You earn interest on the loan.
DeFi lending uses lending pools. You, along with other people, deposit your crypto into a pool, locked up in smart contracts. Borrowers then take loans from this pool. In return for your funds, you earn interest.
Automated market makers, or AMMs, manage these pools. These allow users to trade assets without a central order book. The protocol charges a small fee for every trade that occurs within the pool. These fees are distributed as rewards to the liquidity providers based on their share of the pool.
DeFi lending protocols have experienced remarkable growth. Their total value locked (TVL) soared from nearly zero at the end of 2020 to a peak of over $50 billion during the market boom of early 2022.
The rewards can be significantly higher than those from staking. You can significantly increase your assets over time if you reinvest rewards.
#3 Hold Revenue-Sharing Tokens
Revenue-sharing tokens are a lot like dividend-paying stocks in the traditional financial world. They are a type of digital asset that rewards holders with a share of a project’s earnings. The payouts usually come from transaction fees or platform revenues. The best part is that you earn them simply by holding the token in your wallet.
Holding these tokens connects you directly to the project’s success. It makes you a part-owner of the ecosystem. When the project does well and generates more revenue, your income from the tokens goes up. This creates a mutually beneficial relationship.
Decentralized exchanges (DEXs), for example, often issue tokens that give holders a slice of the trading fees. Gaming platforms and NFT marketplaces are also adopting similar models. While returns can vary, the idea remains the same: the healthier the ecosystem, the healthier your earnings.
To make smart crypto investments, focus on projects with sustainable business models and genuine revenue streams. Look for platforms with real users, actual trading volume, and transparent financial reporting. Don’t get fooled by projects promising unrealistic returns. If something sounds too good to be true, it probably is.
Do Your Research Before You Start
Staking, DeFi lending, and revenue-sharing tokens each offer a unique way to earn passive income with crypto. They are not created equal, however. Which method is right for you depends on your goals, risk tolerance, and the amount of effort you are willing to put in.
If you prefer a ‘set it and forget it’ approach, staking might be your go-to. But go for DeFi lending if you’re chasing higher returns. And if you like the idea of sharing in a project’s success, revenue-sharing tokens might be right up your alley.
Whatever you choose, start small, do your research, and never invest more than you can afford to lose. With a thoughtful approach, you can put your crypto to work and earn passive income that grows quietly in the background.