Crypto isn't just about price speculation. You can put your holdings to work and earn consistent income while you hold.

In 2026, passive income options in crypto have matured significantly. Yields range from 2% to 15%+ depending on risk tolerance, and the infrastructure is more reliable than it was even two years ago.

Here are five proven ways to earn passive income with crypto, ranked from safest to most aggressive.

1. Staking (2-7% APY)

Risk level: Low-Medium
Best for: Long-term holders of proof-of-stake tokens

Staking is the most straightforward way to earn crypto income. You lock your tokens to help secure a blockchain network and receive rewards in return.

How It Works

Proof-of-stake blockchains like Ethereum, Solana, and Cosmos use stakers instead of miners to validate transactions. When you stake, you're essentially voting that a validator is trustworthy. Correct validations earn rewards; misbehavior risks slashing (losing staked funds).

Current Yields

Ethereum offers lower yields but with more stability and less inflation. Higher-yield chains carry more risk, and higher staking yields result in higher token inflation, which in general is a negative.

Getting Started

For ETH, use liquid staking through Lido (stETH) or Rocket Pool (rETH). You receive a token representing your staked ETH that you can use elsewhere in DeFi.

For Solana and Cosmos, delegate directly through wallets like Phantom or Keplr. Pick validators with good track records and reasonable commission rates.

Risks

• Price risk: If the token drops 50%, your staked position drops 50%

• Slashing: Rare with reputable validators, but possible

• Smart contract risk: Liquid staking protocols can have bugs

2. Stablecoin Lending (5-10% APY)

Risk level: Medium
Best for: Those who want yield without price exposure

Lending stablecoins like USDC or USDT lets you earn interest without worrying about crypto price swings. Your principal stays denominated in dollars.

How It Works

DeFi protocols like Aave and Compound connect lenders with borrowers. Borrowers pay interest; lenders receive most of it (minus protocol fees). Rates fluctuate based on supply and demand.

Current Yields

Layer 2 networks like Arbitrum and Optimism often offer higher yields with lower fees.

Getting Started

1. Get USDC in a self-custody wallet

2. Bridge to your preferred network (Arbitrum has good rates and low fees)

3. Connect to Aave or Compound

4. Deposit and start earning

Your deposited stablecoins can be withdrawn anytime (unless utilization is extremely high).

Risks

• Smart contract risk: A protocol exploit could drain funds

• Stablecoin risk: USDC or USDT could depeg (rare but happened with UST)

• Regulatory risk: SEC actions against stablecoin issuers could cause issues

3. Liquidity Provision (10-50%+ APY)

Risk level: High
Best for: Experienced users who understand impermanent loss

Providing liquidity to decentralized exchanges earns you a share of trading fees. Yields can be substantial but come with significant complexity.

How It Works

You deposit two tokens (e.g., ETH and USDC) into a trading pool. When users trade between those tokens, they pay fees. Liquidity providers split those fees proportionally.

Current Yields

Yields vary wildly based on trading volume and competition:

High-yield pairs usually involve volatile or obscure tokens. Be skeptical of extreme returns.

Impermanent Loss

This is the catch that destroys many new LPs.

If one token in your pair rises significantly against the other, you end up with less value than if you'd just held both tokens. The "loss" is impermanent because it reverses if prices return to entry, but that often doesn't happen.

Example: You LP with $1000 ETH and $1000 USDC. ETH doubles. You'd expect $3000, but due to IL, you might have $2700. The trading fees need to exceed this loss to be profitable.

Getting Started

Start with stablecoin-stablecoin pairs (USDC/USDT) to learn without impermanent loss. Then graduate to ETH/stablecoin pairs if comfortable.

Use concentrated liquidity on Uniswap v3 to boost yields, but understand it amplifies IL too.

Risks

• Impermanent loss: Can exceed earned fees

• Smart contract risk: DEX exploits happen

• Rug pulls: On sketchy tokens, liquidity can be drained

4. Tokenized Treasuries (3.5-13% APY)

Risk level: Low-Medium
Best for: Those wanting traditional safety with crypto convenience

Tokenized treasuries are the new bridge between TradFi and crypto. You hold a token backed 1:1 by actual US Treasury bills.

How It Works

Protocols like Ondo Finance and Backed purchase Treasury bills and issue blockchain tokens representing ownership. You hold OUSG or similar tokens and earn Treasury yields.

Current Yields

Yields track actual Treasury rates, currently around 3.5-4.5%.

Why This Matters

You get:

• Treasury-level safety on your principal

• Yield on-chain without leaving crypto

• No TradFi brokerage account needed

• 24/7 liquidity (no market hours)

For risk-averse crypto users, this is arguably the best option in 2026. You're basically holding Treasuries with blockchain convenience.

Getting Started

Most tokenized treasuries require KYC and have minimum investments ($1000+). Visit Ondo or Backed, complete verification, and purchase tokens.

Some are available through aggregators like Pistachio.fi without direct protocol interaction.

Risks

• Regulatory: New category, rules could change

• Counterparty: You trust the issuer to actually hold Treasuries

• Redemption: Converting back to fiat involves off-ramps

5. Yield Aggregation (Variable APY)

Risk level: Medium-High
Best for: Those who want optimized yields without manual work

Yield aggregators automatically move your funds between protocols to chase the best rates.

How It Works

You deposit into a vault. The vault's strategy might:

• Stake your ETH and use stETH as collateral

• Borrow stablecoins against that collateral

• Lend those stablecoins for additional yield

• Auto-compound everything

The result is leveraged yield higher than any single strategy alone.

Current Options

Yields fluctuate based on market conditions and strategy performance.

Getting Started

Yearn vaults are the most established. Deposit into a vault matching your token and risk preference. The vault handles everything.

More aggressive options like Sommelier require understanding what the strategy actually does. Don't deposit into strategies you don't understand.

Risks

• Compounded smart contract risk: Multiple protocols = multiple failure points

• Strategy risk: Complex strategies can unwind badly in market stress

• Leverage risk: Borrowed positions can be liquidated

Comparing Your Options

For beginners: Start with staking or stablecoin lending. Learn the mechanics before increasing complexity.

For safety seekers: Tokenized treasuries offer the best risk-adjusted returns if you're not interested in crypto price exposure.

For yield maximizers: Combine stablecoin lending with yield aggregation, but understand you're stacking risks.

Building a Passive Income Portfolio

Here's a practical allocation for someone with $10,000 to deploy:

Total expected yield: ~4.2% or $420/year

This portfolio balances safety and yield. Adjust ratios based on your risk tolerance. More aggressive allocations could push to 6-8% yield, but with significantly higher risk.

Getting Started with Pistachio.fi

The traditional path to crypto yield involved wallets, gas fees, protocol research, and tax tracking headaches. Pistachio.fi eliminates all of that:

1. Sign up in minutes. No seed phrases to manage - we've made self-custody simple.

2. Browse curated vaults. Every option has a clear risk grade and expected yield.

3. Deposit with zero gas fees. Pistachio.fi is completely gasless - you keep more of your yield.

4. Earn passively. Your funds work for you across optimized strategies.

5. Track taxes automatically. Our AI-powered accounting categorizes every transaction.

Passive income in crypto is real, and it's no longer just for DeFi experts. With the right platform, earning yield is as simple as opening a savings account - but with potentially much better returns.

Pistachio.fi makes crypto yield accessible to everyone. Curated vaults, expert risk grades, zero gas fees, and built-in tax tracking - start earning in minutes.