How to Earn Passive Crypto Revenue on Binance (Staking Guide)
Passive revenue is arguably the master key to unlocking financial freedom.
Simply understood as revenue generated from assets and enterprises in which an individual is not actively engaged, passive revenue is particularly instrumental in building exponentially compounding fortunes for a few reasons.
Firstly, passive revenue streams require little to no active effort, essentially solving for the limited amount of time and effort that can humanly be invested in active revenue streams such as a job or a business.
Secondly, if passive revenues are re-invested, the earnings are able to generate compounding returns. Compounding returns are exponential in their yields, and able to deliver large returns in relatively short timeframes.
Finally, passive revenue provides the liquidity and holding power needed for pursuing high-risk-reward profile investment classes such as investments in cryptocurrencies and NFTs.
Once the importance of generating passive revenue is considered, the immediate next question is how passive revenue can be generated. Traditionally, popular passive revenue streams will include rental properties, dividend yields from stocks, and fixed-term deposits.
However, with the advent, adoption, and popularization of decentralized financing protocols based on cryptocurrencies and blockchain technology, passive revenue generation is less capital intensive, hassle-free, and infinitely more lucrative.
Decentralized Financing (De-Fi) is a rapidly growing application of cryptocurrency and blockchain technology. The market size of De-Fi at the time of writing is estimated in excess of USD 100 Billion, indicative of the promise and potential of the space.
De-Fi is a growing space with a multitude of applications that decentrally replicate instruments in the traditional financial ecosystem, such as loans, fixed-term deposits, and derivatives trading.
The specific application of De-Fi that this guide intends to explore is “staking.”
Staking is a decentralized instrument that closely mirrors a fixed-term deposit. At a high level, staking is a method for committing cryptocurrencies to a lock-up period in return for unlocking rewards that are paid out in cryptocurrency similar to interest paid out by a traditional fixed-term deposit.
Staking rewards are paid out by proof of stake blockchains, which utilize staked cryptocurrencies to validate transactions on the blockchain. It’s an interesting topic to read up on in technical detail if that interests you.
Staking is a great way to earn passive income for a number of reasons including the low entry capital required, high reward payouts, and the convenience of managing staked investments from a mobile phone or PC.
Before we go any further, take a quick look at the Locked Staking products that Binance offers investors by clicking this link.
STEP 1 — Set-Up Binance Wallet
The first step is to sign-up for and register your Binance wallet. Use this link to receive a 20% discount on all trading fees on Binance.
Once you’ve registered, this guide can help you set up your Binance wallet.
You can access the desktop browser version of Binance staking menus here and here.
STEP 2 — Fund Binance Wallet (Invest)
The next step is to invest some funds into crypto by purchasing USDT on the Binance P2P marketplace. Use this guide to learn how to buy and sell USDT on Binance using the P2P marketplace (Coming Soon).
Guide to Buying & Selling USDT on Binance P2P (Coming Soon)
It’s best to start out with a modest sum in the range of $250 to $1000 to diversify broadly enough and generate some significant revenue on a monthly basis. At the time of writing $500 worth of USDT is priced at approximately LKR 200,000/- (USDT is usually priced at the same rates as black market USD).
Once you’ve purchased USDT, transfer the USDT from your Funding Wallet to your Spot Wallet, and you’ll be ready to start staking.
STEP 3 — Access Staking Menu
There are two main ways to access “staking” on the Binance mobile app.
The first is from the “Earn” tab on the homepage of the Binance mobile app. Once the “Earn” tab is opened, “Locked Staking” should be selected from the menu. The other options on the menu are also instruments for passive revenue generation, but the focus of this guide will be on “Locked Staking.”
The second is from navigating to “Wallets” and sliding to the end of the top ribbon and finding the “Earn” wallet.
Ensure that your Binance app is turned to “Pro Mode” by clicking on your user avatar on the top left of the home screen before trying to access Staking menus.
STEP 4 — Risk Management
Once the “Staking” menu is accessed from either of the above methods, the next step is to pick the cryptocurrency to be staked, and for what duration. A few things must be understood at this point.
At a high level, staking involves the purchase of a cryptocurrency at the present value of that coin and locking the coin(s) up for a period of time to earn rewards.
The inherent risk is that the coin may lose value during the time that it’s locked up and staked. Simply put, if the price of the cryptocurrency that you stake drops, the investment can potentially lose its value.
The losses incurred this way are impermanent, in the sense that the prices may move up again in the future, provided the cryptocurrency that was invested in has strong fundamentals and future potential.
On the other hand, the asset also may gain value (increase in price). If this happens, the investment makes capital gains in addition to the earned staking rewards.
The following strategies can help minimize the risk profile of staked investments:
- Timing the Purchase — Purchasing the cryptocurrency at a low price point or during a market crash allows investors to minimize the risk of the price dropping drastically during the staked period.
- Research — Analyzing the cryptocurrencies that are staked in terms of their market capitalization, partnerships, development roadmap, past performance, and future potential.
- Diversification — Staking a variety of cryptocurrencies instead of just one or two assets helps maintain a balanced portfolio with diversified risk exposure to the price performance.
- Stable Coins — Cryptocurrencies that are pegged to fiat currencies (typically the US Dollar) are considered to be stable coins, and in theory don’t fluctuate in their value. This makes stable coins a great choice to be included in a staking portfolio.
STEP 5 — Basics of Staking
Once sufficient research has been done to understand the risk-reward profile of staking cryptocurrencies, staking options offered by Binance should be assessed.
Based on market conditions and other factors, Binance offers a variety of staking options for 170+ cryptocurrencies at any time. These options are revised frequently and should be checked on regularly to capitalize on opportunities.
When considering a staking option, the following factors need to be considered and decided on.
- The Cryptocurrency — What the staked asset is.
- The Annualized Profit Yield (APY) — Annual rewards that staking the asset will earn as a percentage of the investment value.
- Lock-Up Period — The duration of time that the cryptocurrency should be locked in order to earn the rewards.
In the above example:
The cryptocurrency is Axie Infinity Shards (AXS), a cryptocurrency that is the native token powering Axie Infinity, a Pokemon-like game. The price of AXS at the time of writing is $30.55 with a 24-hour trading volume of $515 Million, and a market capitalization of $2.3 Billion.
The annualized profit yield (APY) is 120%.
The lock-up period is 90-days.
STEP 6 — Calculating Rewards
Once a suitable cryptocurrency option is selected to be staked, the reward calculation should be done to understand how much earnings can be expected from the staking activity.
In the above example, the reward calculation will be done as follows when considering an investment of $100:
Capital Invested = $100
Annualized Profit Yield (APY) = 100.23%
Lock-Up Period = 90-Days
In 90-days, the $100 investment will earn:
($100 x 100.23%) x 90/365 = $24.71
(Capital Invested x APY) x Investment Period in Days/365 = Total Earnings
Step 7 — Tracking Profits
Rewards earned by staked assets are paid out daily and will appear in the “Spot Wallet” on the Binance mobile app.
Earnings made from staking assets can also be viewed from the dashboard provided by Binance at the top of the screen in the “Earn” wallet.
In the above example:
- The total value of assets staked is $8,779.69 — This value changes based on the market value (price) of the staked assets.
- Total rewards earned over the last 30-days are valued at $129.42.
- Daily rewards earned are valued at $4.37.
- Assets in locked staking have earned $4.26 of the total rewards earned.
STEP 8 — Diversifying $1000
At the time of writing Binance offers some great staking options. Doing your own research before making investments is critically important. I’m not a financial expert or investment advisor, and can only speak to my own experience with using Binance to stake for passive revenue.
At the time of writing, I’m generating approximately $4.5 daily from an investment of $6000 made in locked staking on Binance. That works out to about 27.4% in annualized Dollar returns with minimal risk.
Considering the current state of the Sri Lankan and global economies, these returns are phenomenal.
For anyone interested, below is my personal (and unqualified) recommendation of how to diversify and stake $1000 on Binance for passive revenue.
*Please note that APY rates change periodically and the below rates of return may not be applicable for long.
Stake $200 in DOT (Polkadot) for 90 days at 21.66% APY
Stake $150 in USDT (Tether) flexibly (no lock-up period) for 10% APY
Stake $150 in BUSD (Binance USD) flexibly for 10% APY
Stake $100 in AXS (Axie Infinity Shards) for 90 days at 120.69% APY
Stake $100 in CAKE (Pancake Swap) for 90 days at 70.56% APY
Stake $100 in BSW (Biswap) for 90 days at 100.23% APY
Stake $100 in BNB (Binance Coin) for 120 days at 12.99% APY
Stake $100 in ANC (Anchor Token) for 90 days at 29.42% APY
Without considering impermanent gains and losses (from price changes), the above portfolio should earn rewards as follows in 90 days:
$200 DOT = $10.83
$150 USDT = $3.75
$150 BUSD = $3.75
$100 AXS = $30.17
$100 CAKE = $17.64
$100 BSW = $25.05
$100 BNB = $3.25
$100 ANC = $7.35
Total = $101.79
ROI% = 40.7% (Annualized)
In the above example of a diversified staking portfolio, the Dollar returns can be calculated at 40.7% per annum. When compared with 18% Rupee-returns which can be earned through a Fixed Deposit in Sri Lanka, staking cryptocurrencies for passive revenue becomes an obvious choice.
Without a doubt, the risks involved with cryptocurrency apply to staking as well, and short-term price volatility can significantly impact the value of returns earned. However, the case is strong for including crypto staking in a diversified investment portfolio as a high-risk investment with the potential for extremely high returns.
STEP 9 — Buying Crypto for Staking
Once the portfolio of cryptocurrencies you are planning on staking has been selected, head over to the “Trade” tab in your Binance mobile app to purchase the asset.
Please ensure:
1. That there is sufficient USDT in your “Fiat & Spot Wallet” to make the purchase(s)
2. Check the maximum staking amount allowed of the cryptocurrency you’ve selected to stake.
Click on the “Trade” tab in the middle of the menu at the bottom of the screen in the Binance app.
In the above example, Bitcoin is priced at $34162.60 and can be purchased immediately by placing a market order. Alternatively, a limit order can be placed to purchase Bitcoin at a preferred price, if and when that price is reached.
In the “(USDT)” field, enter the amount you plan on investing in the cryptocurrency. Ensure that you have sufficient amount of USDT in your wallet to make the purchase.
STEP 10 — Subscribe to Staking
Once the cryptocurrency has been purchased for staking, search for the coin from the staking menu.
Once the cryptocurrency has been searched for, select the staking option result that you are interested in subscribing for. Once the selection is made, the investment form will appear as shown below:
In the investment form, select the duration for staking, and enter the quantity of the asset that should be staked by manually typing in the amount or clicking “Max.”
Make a note of the redemption date and estimated interest pay-out.
Scroll to the bottom of the page:
Read the Binance Staking Service Agreement, check the agreement box and click confirm.
Congratulations, you have staked your crypto asset for passive revenue!
