6 Ways to Earn Passive Income with Crypto in 2026

Making your crypto work for you while you sleep sounds great. And in 2026, there are more ways to earn yield than ever. But not all passive income is created equal. Some strategies are genuinely solid. Others are ticking time bombs with a nice APY on top.

Here are six real ways to earn passive income with crypto right now, what the actual returns look like, and the risks nobody puts in the marketing materials.

1. Staking Proof-of-Stake tokens

This is the simplest and safest form of crypto passive income. When you stake tokens on a proof-of-stake blockchain, you're helping secure the network and earning rewards for it.

What it pays: ETH staking yields around 3-4% APY. Solana sits around 6-7%. Cosmos ecosystem tokens vary from 5-20% depending on the chain.

The risks: Your tokens are usually locked for some period (though liquid staking has mostly solved this). If the token's price drops 40%, your 5% staking yield doesn't save you. Staking rewards are in the token itself, which means your real return depends on price action.

Best for: People who plan to hold the token long-term anyway. You were going to hold ETH for two years? Might as well earn 3-4% while you wait.

How to start: For ETH, use liquid staking through Lido (stETH) or Rocket Pool (rETH). You get a liquid token back that you can use in DeFi while earning staking rewards. For other chains, delegate through your wallet to a reputable validator.

2. Lending on DeFi protocols

Deposit your crypto into a lending protocol and earn interest from borrowers. It works like a savings account, except the interest rates are usually better and there's no bank in the middle.

What it pays: Stablecoin lending on Aave or Compound typically yields 3-8% APY depending on market conditions. When borrowing demand is high (usually in bull markets), rates spike. In quiet periods, they drop to low single digits.

The risks: Smart contract risk is the big one. If the lending protocol gets hacked, you could lose everything. There's also the risk that a borrower's collateral crashes too fast for the liquidation system to handle, leaving a deficit. It's rare on major protocols but it's happened.

Best for: People with stablecoins sitting idle. Earning 5% on USDC beats 0% in your wallet. Just make sure you're using an audited, battle-tested protocol.

How to start: Aave is the largest and most established. Deposit USDC, USDT, ETH, or other supported tokens and start earning immediately. No minimum, no lockup.

3. Liquidity provision on DEXs

When you provide liquidity to a decentralized exchange, you're putting your tokens into a pool that traders swap against. In return, you earn a share of every trade's fee.

What it pays: It varies wildly. Stablecoin pairs might earn 2-10% APY from fees. Volatile pairs can earn 20-100%+ in fees during high-volume periods. But the catch is impermanent loss.

The risks: Impermanent loss is the killer. If the two tokens in your pool diverge significantly in price, you end up with more of the token that dropped and less of the one that pumped. Your position can be worth less than if you'd just held both tokens. On volatile pairs, impermanent loss can easily eat your fee income.

Best for: Experienced DeFi users who understand impermanent loss math. Stablecoin/stablecoin pools (like USDC/USDT) have minimal impermanent loss and can be a decent, lower-risk option.

How to start: Uniswap V3 or concentrated liquidity pools on your preferred chain. Start with a stablecoin pair to learn the mechanics before touching volatile pairs.

4. Real-world asset (RWA) yield

This is the freshest category and honestly one of the most interesting. Protocols like Ondo Finance, MakerDAO (through sDAI), and others let you hold tokenized Treasury bills or other yield-bearing assets on-chain.

What it pays: Whatever US Treasury bills pay, currently around 4-5%. Not flashy, but it's real yield backed by US government debt. No token emissions, no Ponzi dynamics.

The risks: Smart contract risk (as always with DeFi). Regulatory risk, since the legal framework for tokenized securities is still evolving. And counterparty risk on the entity that's actually holding the Treasuries.

Best for: Anyone who wants a boring, reliable return on stablecoins without the complexity of DeFi yield farming. It's the closest thing to a savings account that crypto has.

How to start: Buy sDAI through MakerDAO, or look into USDY from Ondo Finance. Both earn Treasury yield and are fairly liquid.

5. Restaking and points farming

Restaking (pioneered by EigenLayer on Ethereum) lets you take tokens that are already staked and "restake" them to secure additional services. You earn extra yield on top of your base staking rewards.

What it pays: This varies significantly. Base staking + restaking rewards can push total yields to 5-10% on ETH. Some restaking protocols also offer points that may convert to token airdrops down the line.

The risks: Layered risks. You've got the base staking risk, plus the restaking protocol's smart contract risk, plus the risk of the services being secured. If something goes wrong at any layer, you could face slashing (losing a portion of your staked tokens). It's yield stacking, and risk stacks along with it.

Best for: People comfortable with DeFi risk who want to maximize yield on their ETH or other staked assets. Not for beginners.

How to start: Stake ETH through a liquid staking provider (Lido, Rocket Pool), then deposit the LST into EigenLayer or a liquid restaking protocol like Ether.fi or Renzo.

6. Running a node or validator

If you've got the technical skills and capital, running a validator node can be profitable. You earn staking rewards directly without paying a staking provider's fee, plus you may earn tips and MEV rewards.

What it pays: ETH solo validators earn the base staking rate plus priority fees and MEV, which can add 1-2% on top. Other chains with lower validator requirements can have higher yields.

The risks: Running a validator requires 32 ETH (a significant capital commitment) and reliable uptime. If your node goes offline or behaves incorrectly, you can get slashed. There's also hardware costs and the technical maintenance burden.

Best for: Technical users with significant capital who want to contribute directly to network security while maximizing yield. If you can't handle the tech, stick with liquid staking.

How to start: Ethereum's official documentation has guides for running a validator. You'll need 32 ETH, a dedicated machine (or cloud server), and a commitment to keeping it running 24/7.

The honest truth about passive income in crypto

None of these are truly "passive" in the way a bank savings account is passive. They all require some level of active management, risk assessment, and monitoring. Smart contract risk is present in almost every DeFi strategy. Token price risk means your real returns can be negative even with high APY.

The safest approach: start with simple staking or stablecoin lending on established protocols. As you get more comfortable, explore restaking or LP positions. And always remember that if an APY sounds too good to be true, you're the yield.