How to earn cryptocurrency

It’s important to be aware that earning cryptocurrency – however easy it may seem – involves a number of potential risks.

Crypto prices can be volatile and the Web3 ecosystem can still be difficult to navigate.

Users place their funds at risk in various ways while earning crypto. In circumstances where people put their crypto at risk in order to earn additional rewards, it is extremely important for users to do their own research.

Prices can fall, tools can be complex and concepts may be tough to understand, so it’s important to understand the steps not to take as well. 

For more information, check out our Kraken Learn Center article, How to keep your crypto safe.

Whether you’re still unsure about the cryptocurrency market or don’t have $10 to get started, there are ways you can receive crypto tokens.

Most options require you to perform some sort of task, similar to earning money for completing an action.

It could be downloading an app, watching videos or sharing social media posts.

These methods have you invest your time — instead of your capital — to earn cryptocurrency.

Watching advertisements 📺

For years, companies such as Facebook and Google have generated revenue from their viewers through advertisements. As the saying goes — 'if you're not paying for the product, you are the product.'

However, with the rise of web3 platforms, there are now crypto-based web browsers and platforms that seek to empower users by rewarding them for watching personalized ads.

Brave browser is one such platform that provides this feature. Think of it as a crypto-focused version of Google Chrome. In return for periodically watching web ads, Brave allows users to earn its native utility token — Basic Attention Token (BAT).

While the amount of BAT tokens users can earn per month can vary greatly, users on r/BATproject reported earning anywhere from 2 - 15 BAT per month — depending on usage.

Get paid in cryptocurrency 👨‍💻

Another simple way of collecting digital assets without spending money you already have is to receive part or all of your income in cryptocurrency. 

There are a number of job boards that list positions where candidates can be paid in crypto for their work, and some crypto-based companies including Kraken allow their staff to be paid directly in cryptocurrency.

Of course, getting paid in crypto comes with a number of risks. Price volatility common to crypto markets can lead to ‘mark to market’ losses.

Crypto earnings must be reported accurately for tax purposes and newcomers, which we cover in more detail in the Kraken Learn Center’s Crypto tax guide.

For the interested, PompCryptoJobs, Crypto Jobs List and Cryptocurrencyjobs are just three of many platforms for sourcing blockchain-related jobs in areas such as Marketing, Sales, Operations, Engineering and more.

Airdrops and microtasks 🪂

Many protocols need to distribute a large amount of cryptocurrency quickly across multiple wallets in order to uphold the network's security.

You can learn more about this concept in the Kraken Learn Center article, What is a blockchain consensus mechanism?

Because of this security need, many early-stage blockchain projects choose to airdrop free tokens to people who show interest and engage with the platforms.

Airdrop Alert, 99 airdrops and Airdrop.io are some of the free platforms that list a wide range of upcoming token airdrops. Many of them simply require users to sign up an account and submit their general information to receive an amount of native tokens completely free.

In addition to airdrops, many startups will offer additional tokens for completing challenges called “microtasks.” These can include actions such as sharing social media posts, creating content related to the project or referring friends to the project.

Note that scammers have used crypto airdrops in the past to steal people’s personal information, such as emails and home addresses. Rigorous due diligence is recommended before participating in any airdrop.

Check out our article, How to stay safe in DeFi, for more information.

The culmination of online gaming, decentralized finance and non-fungible tokens (tokens that represent ownership of digital items) has led to a new industry of play-to-earn games.

These are a new type of online game where players have the opportunity to earn cryptocurrency and collect NFTs during gameplay, turning a passtime into a potentially lucrative experience. 

In fact, all collectible assets in-game are represented as NFTs, meaning the players, not the underlying company, retain full ownership of them. It also means gamers can sell or trade their in-game items to others via in-house marketplaces, creating a commerce-based gaming environment.

Popular games under this umbrella include:

• Decentraland (MANA)

• Axie Infinity (AXS)

• The Sandbox (SAND)

Certain play-to-earn games have introduced DeFi-based elements like token swapping, staking and yield farming into their games to provide players with additional value. 

An example of this is My Neighbor Alice (ALICE), a farming-based game reminiscent of Animal Crossing.

Other options for earning cryptocurrency in these play-to-earn games include buying virtual plots of land and creating structures or experiences on them. These can then be monetized by charging other players to visit them or by selling off the developed land at a higher price than it was originally bought for.

For those that already own crypto assets, there are ways to put their assets to work with the goal of earning additional coins that generate revenue for the user. 

These options typically require a basic to intermediate understanding of the industry, like how to navigate platforms, use specialized hardware (in some cases) and set up crypto wallets. They also carry certain unique risks that users should be aware of before getting started.

Staking 🥩

Staking is a way for those holding certain cryptocurrencies to generate rewards from the assets they hold.

Fundamentally, staking helps to secure the blockchain network by incentivizing participants to behave honestly.

It does this by distributing tokens to those that take part in the validation process.

Staking involves locking up specific types of tokens in a smart contract in order to take part in the validation process. Validators earn a fixed amount reward (usually denominated in the native cryptocurrency) for helping to take part in securing the network. 

The trade-off is that tokens can typically not be withdrawn, sold or lent until they are unstaked. 

Staking can be done independently, through a delegated staking pool (where users elect an individual to stake their pooled assets on their behalf) or through centralized exchange platforms like Kraken. (Staking on Kraken is not available in the US and certain other geos)

It’s important to note, only cryptocurrencies belonging to proof-of-stake (PoS) based blockchains – or those wrapped and represented as synthetic assets on a PoS chain – can generate revenue in this way. 

These include tokens like:

• Cardano (ADA)

• Wrapped Bitcoin (WBTC) 

• Ethereum (ETH)

• Polkadot (DOT)

• Algorand (ALGO)

• Polygon (MATIC)

• Cosmos (ATOM)

Click here to learn more about crypto staking.

Mining ⛏️

Mining is a term often associated with Bitcoin, but there are a number of other tokens that can also be mined to earn “block rewards” – newly minted cryptocurrency and transaction fees.

Mining involves purchasing or renting specialized computing equipment dedicated to winning a cryptography-based competition for the right to propose a new block. Running these machines often incurs high electrical and maintenance costs and does not guarantee profits, which is why some people opt to join mining pools instead.

Mining pools are communal groups of miners that combine resources to form a single mining entity. By pooling computational power, the group stands a significantly better chance of winning the competition. Any block reward earned by a member of the pool is then divided proportionally among members of the pool.

Only coins associated with proof-of-work based blockchains can be mined. 

Aside from Bitcoin, some other cryptocurrencies that can be mined include: 

• Bitcoin Cash (BCH)

• Dogecoin (DOGE)

• Litecoin (LTC)

• ZCash (ZEC)

Click here to learn more about bitcoin mining.

DeFi-based activities ⚙️

The emergence of the decentralized finance (DeFi) sector has brought about new ways for crypto holders to earn rewards on the digital assets they hold. 

These innovative new apps allow crypto holders to manage their finances through peer-to-peer services.

DeFi apps typically involve heightened capital risks and generally require a higher level of crypto experience. Exploitable loopholes, security breaches and fraud are prevalent in the nascent DeFi space, so rigorous due diligence is a good rule of thumb before investing any capital.

Learn more with our guide on How to stay safe in DeFi.

Liquidity pools 💧

Decentralized, peer-to-peer trading platforms introduced a new type of order book system where, instead of a third-party matching system connecting buyers and sellers, users deposit paired assets into liquidity pools that other people trade against.

In return for providing market liquidity, users receive an LP token (liquidity provider token) that represents their share of the assets in the pool. This token entitles the holder to a proportional share of all transaction fees charged to people who swap assets using the liquidity pool.

When a liquidity provider wishes to withdraw their tokens from the pool and cash in their share of transaction fees, they simply redeem their LP token(s). Once their tokens are redeemed users can spend their assets on other assets or convert it to cash.

Before investing in liquidity pools, you may want to understand their unique characteristics, as well as the concept of impermanent loss.

Click here to learn more about liquidity pools.

Yield farming 🚜

One of the biggest trends to emerge from the early DeFi craze in 2020 was the arrival of yield farming. 

This strategy involves leveraging multiple yield-earning platforms simultaneously to maximize earning potential.

For example, a person could deposit cryptocurrency into a liquidity pool, receive LP tokens and earn a share of transaction fees. Some platforms then allow you to take those LP tokens and stake them to generate an additional return. 

While this strategy can be challenging to implement, it also creates the potential for a double return on a single set of assets.

Some of the most popular yield farming platforms include:

• Uniswap (UNI)

• yearn.finance (YFI)

• PancakeSwap (CAKE)

Click here to learn more about yield farming.

Lending 🤝

Decentralized lending platforms allow anyone to act like a bank and lend their assets to a global pool of borrowers in order to receive fixed interest rates on the loan. These loans are usually secured by collateral locked in smart contracts to ensure lenders are protected against defaults.

Compound (COMP) and Aave (AAVE) are popular platforms for crypto lending.

Interest rates on these platforms vary depending on which cryptoasset is loaned out.

Earn rewards on your crypto with Kraken Rewards.

Kraken Rewards lets you automatically earn APR on any eligible crypto you hold. By turning on Rewards you can generate earnings with staking, which compounds over time.

Learn more about how to put your crypto to work with Kraken or sign up today to start earning on your eligible crypto assets.