Julian Ivaldy

Passive Income Streams in Web3

Creating blockchain-based startups is becoming more and more mediatized and after the investors’ rush, people are now seriously jumping into web3 entrepreneurship. But beyond the first web3 Unicorns and the dreams to build blockchain tech giants, there are many ways to create a business in this industry. And it’s never been so easy to create passive income flows, trust me! Whether you are an employee, a web3 investor, or an entrepreneur willing to generate some additional cash in parallel with your activity, here are all the best ways to generate passive cash flow using blockchain! 👇

Let’s start with the basics and what supports most of DeFi nowadays. Liquidity pools are one of the pillars of the crypto industry since they enable liquidity exchanges and Peer-to-Peer trading. The idea is simple: to power trades between assets in a decentralized exchange (DEX), one needs liquidities… It’s exactly like banks needing ATM systems to withdraw cash. The idea is that liquidity pools enable users to pool assets in a DEX's smart contracts so as to provide liquidities for traders to swap between different currencies. And the good news is that you can use popular DEX like Uniswap or PancakeSwap to generate complete passive income from the pools. For instance, with ETH/USDT exchanges, a trader will deposit USDT on one side and withdraw ETH on the other. That’s during this transaction that the liquidity provider (ETH in this case), will earn a small percentage of fees to thank him. The passivity comes from the cash generated when providing your assets in the pool. The amount of the reward is mostly determined by the volume of the pool and the proportion you earn. But be careful with the market volatility which brings several risks to this practice!

Another easy way to get interesting income in a completely passive way is APYs. They simply consist of depositing cryptos on a platform acting as a savings account in centralized banks. To do so, one needs to choose wisely a token and a protocol, then search for a corresponding APY and deposit amounts of tokens. 

Another popular way to produce passive income with an interesting yield is staking. When a blockchain or new cryptocurrency uses a proof-of-stake, one needs to validate new transactions before adding them to the chain. To do so, users need to pledge some of their coins to the protocol to validate and confirm blocks of transaction. The contributors are rewarded with new crypto coins as soon as a new block is validated thanks to them.

Even if it’s not completely passive, one can use DAOs to earn money on web3. Most governance and protocol DAOs reward their users for their contribution to the community. For instance, at Mobula, we propose our members control the quality and veracity of new tokens’ data, and provide and collect data on new tokens to aggregate on our platform. According to the quality of the given data, the contributors will be automatically rewarded by the DAO with $MOBL. It’s like a virtuous circle: the more members will help the tool grow, the more $MOBL they’ll earn and since more users will join and use the app, the token’s value will increase and it will generate a passive income with a nice yield for early users. 

NFT can also be a nice source to create new income streams in many different ways. First, using the same mechanism as cryptocurrencies, it’s also possible to stake NFTs and get rewarded for your contribution to the blockchain with digital assets. Most NFT marketplaces offer royalties to their creators. This is mostly used in industries such as music or art. Every time someone sells or uses an NFT you created, you’ll earn royalties on the transaction. Another good practice is NFT lending. It’s now possible to earn a recurring loan from the lending of your digital assets on platforms such as EverGrow Coin. 

I’m sure you’ve heard about cloud mining. It is one of the most popular ways to earn money with blockchain technology since it was one of the first to be introduced. But it might not be as interesting as it used to be in the past. Indeed, it requires a huge investment in hardware and computing equipment and is very expensive considering electrical powering. As an individual, I don’t advise it to earn passive income.

GameFi is also a nice industry to consider. Play-to-earn blockchain games enable gamers to earn crypto or NFTs while contributing to the game evolution. Players can receive rewards with real-world value. For instance, one can create new digital assets to power Decentraland and earn crypto from the use of his creations and for being active on the platform. 

If you’re keen on searching for new promising tokens, Airdrops could help you earn easy additional incomes. Many tools and platforms try to attract users with token airdrops for early adopters. Spotting these airdrops is a very easy way to earn free tokens.

Metaverse expansion could lead to several other sources of passive income. Even if it’s a bit too early to hope for nice returns on investment with metaverse-based solutions, there could be several opportunities to be prepared for. For instance, property and land renting in a metaverse, web3 advertising, creating web3 stores… Let’s see how it evolves in the upcoming months!