There are a few ways to earn passive income from your crypto holdings, including staking, crypto lending, yield farming, and decentralized finance (DeFi). As I write this, platforms like Aave (AAVE +13.65%) and Compound (COMP +9.53%) pay annual percentage yields (APYs) of 4.79% and 3.27%, respectively, on USD Coin (USDC +0.01%).
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However, there are limited consumer protections on crypto lending platforms, which can make them a risky way to generate yield. For example, many users lost money when the Celsius lending platform collapsed. Staking is a safer way to put your crypto to work.
Generating passive income through staking
In staking, certain cryptocurrencies pay yields to investors as a reward for contributing to network security. These include Ethereum (ETH +10.01%), Solana (SOL +16.07%), and Cardano (ADA +18.11%). You can stake crypto through exchanges, DeFi platforms, and a handful of staking exchange-traded funds (ETFs). The Bitwise Solana Staking ETF (BSOL +10.43%) says Solana holders can earn up to 7% average returns. We're likely to see the Securities and Exchange Commission (SEC) approve more staking ETFs this year -- it will be interesting to see what yields they offer.
NYSEMKT: BSOL
Key Data Points
If you stake through an exchange, rewards are not as impressive. Indeed, the APY for popular cryptos barely competes with what you might earn with a high-interest savings account or even dividend-paying stocks. It's worth comparing crypto returns to other passive income ideas -- cryptocurrency can be volatile, and the price swings often outweigh the returns.
Here's how much you could earn by staking $50,000 on Coinbase (COIN +13.02%).
| Crypto | Max APY | 1-Year Gain on $50,000 | 5-Year Gain on $50,000 (Compounded) |
|---|---|---|---|
| Ethereum | 1.86% | $930.00 | $4,826.23 |
| Solana | 4.25% | $2,125.00 | $11,567.33 |
| Cardano | 1.50% | $750.00 | $3,864.20 |
Variable APY, correct as of Jan. 30, 2025. APY = annual percentage yield.
Check the fees
Passive income from crypto may take off in 2026 as ETFs make staking more accessible. Always check the fine print, particularly if you use an exchange. For example, in Kraken's Auto Earn program, you receive rewards on only half the assets you stake. Other platforms will take 25% of your earnings in fees.
