Coinbase currently offers an attractive annual percentage yield (APY) of over 4% on staked Solana, as interest in cryptocurrency passive income strategies grows. As the cryptocurrency landscape continues to evolve, the potential for staking exchange-traded funds (ETFs) may become a notable trend by 2026.
To generate passive income from crypto holdings, investors can explore methods such as staking, crypto lending, yield farming, and decentralized finance (DeFi). While platforms like Aave and Compound are providing yields of 4.79% and 3.27% respectively on USD Coin, there are significant risks involved, particularly on lending platforms. The recent collapse of Celsius serves as a stark reminder of the inherent dangers; many users suffered financial losses during that incident. In contrast, staking appears to provide a more secure avenue for earning yields by helping to bolster network security.
Staking allows investors to earn rewards from certain cryptocurrencies, which include Ethereum, Solana, and Cardano. This process can be facilitated via exchanges, DeFi platforms, or a limited number of staking ETFs. For instance, the Bitwise Solana Staking ETF claims that Solana holders could earn an average return of up to 7%. With speculation that the Securities and Exchange Commission (SEC) may approve more staking ETFs in the near future, many are eager to see what yields these products will offer.
Despite these opportunities, staking through exchanges may not provide the most lucrative rewards. The yields for popular cryptocurrencies often fall short when compared to high-interest savings accounts or dividend-paying stocks. As such, it’s crucial for investors to weigh crypto returns against other passive income opportunities, especially given the volatility associated with cryptocurrencies.
An example illustrates potential earnings from staking $50,000 on Coinbase:
- Ethereum: 1.86% APY translates to a one-year gain of $930, and a five-year compounded gain of $4,826.
- Solana: With a 4.25% APY, a one-year gain could reach $2,125, and a five-year compounded gain could amount to $11,567.
- Cardano: This cryptocurrency offers a 1.50% APY, leading to a one-year gain of $750 and a five-year compounded gain of $3,864.
These figures reflect variable APYs as of January 30, 2025. Prospective investors should carefully investigate the fees associated with staking, particularly when using exchange platforms. For example, in Kraken’s Auto Earn program, rewards are only distributed on half of the assets staked, and some platforms may take up to 25% of earnings in fees.
As the crypto market matures, the avenues for passive income could expand significantly. However, due diligence is essential to navigate the complexities and risks inherent in cryptocurrency investments.
