Creating Passive Income
with Crypto.com
If you don’t find a way to make money while you sleep, you will work until you die — Warren Buffett
I grew up thinking that I needed to get a job when I was older. I thought that I’d have to work a 9-5 job, make a salary, and work hard everyday to provide for my family. The notion of making money while I slept, was completely foreign to me. So when I came across this quote by Warren Buffett, my mind was blown wide open. Coupled with my fascination with cryptocurrencies, I was looking for any and all opportunities to create passive income streams with cryptocurrency. Fortunately, the brilliant minds in the crypto space were thinking along the same lines. There are more opportunities to put your money to work than ever before. In this letter, I am going to talk about one of the platforms that I use to do this, Crypto.com.
Crypto.com the Crypto Bank of the Future
When I was much younger, I learned that I could start a savings account. This savings account would be a safe place to keep my funds, and the bank would give me interest on my deposits every month! A whole, whopping .05%. Some quick math will inform you that this is basically nothing. Behind the scenes, the bank is loaning this money to other people at a higher interest rate, and taking the difference as profit. I don’t have anything against this practice in theory, I just have a belief that I should be compensated more fairly for my money being loaned to others. Crypto.com has set up a number of services that lets me put my money to work.
I am not Anti-Bank
I am not anti-bank. In fact, I think banks provide essential services to their customers. They help people secure loans and credit to start businesses or fund education. They open doors to investment opportunities to help people grow their wealth and save for the future. The problem I see with mainstream banks nowadays, is simply that they are outdated, and top-heavy. They are biased towards their more wealthy clientele, giving preferential treatment to those who can afford it. They are staunchly anti-crypto, which in my opinion is anti-innovation. Cryptocurrency, namely Bitcoin, introduce a world of opportunity into the financial sector, and it is socially irresponsible NOT to be innovating upon them. As an owner of money, I have a responsibility to choose financial institutions that give me the best services, rates, and opportunities.
Just so you know, this is the first of my private letters and will contain an analysis and usage of products that I use, test, and review. I am using real numbers and real screenshots to detail my analysis.
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The Services of Crypto.com
Staking CRO for Interest
Crypto.com has their own token/coin that fuels their ecosystem. It is called CRO or “Crypto.com Coin”. You may “stake” CRO on the Crypto.com Exchange, and earn interest, paid out daily.
Staking - The lock up of a coin or token in order to earn a reward. Typically interest at a set annual rate.
When I learned that I could lock up CRO tokens for a set 10% APR (Annual Percentage Rate), I at least wanted to try it out. I picked up 100k CRO tokens, and locked it on the exchange. Sure enough, I started getting daily interest payments for my stake.
(100,000 * %10) / 365 = 27.397260274 CRO per day
As you can see, the 10% APR is not the only perk to staking 100k CRO. There is a signup bonus, trading fee rebates, and something called “The Syndicate”, more on that in a different newsletter.
Daily Interest Payments
As you can see, the daily interest payments are paid out in CRO, and come in precisely at 00:00:00 GMT (20:00:00 ADT). The fact that the payout comes daily is a huge perk, because it means I can do whatever I want with the CRO payout. This ranges from selling it into other assets and diversifying my positions, to staking more CRO to compound the interest I am receiving.
Auto-Allocate the Daily Interest
I’ve written a program that takes the daily interest payments I’ve received from Crypto.com and moves it into other assets.
My main position throughout all of my portfolio is Bitcoin. But at the same time, I want to continue the amount of passive income being added to my portfolio. The point of auto-allocating is to save me time. I don’t want to be logging into the Crypto.com Exchange every day to calculate, and then sell my positions. Benefits of being a programmer!
Crypto Earn - The Crypto Savings Account
The other piece of our passive income strategy uses a different Crypto.com service called “Crypto Earn”. This is essentially a savings account offered in Crypto.com’s mobile application. While Crypto.com offers earn terms in dozens of cryptocurrencies, I am really only making use of 3
Bitcoin - Up to 6.5% APR + 2% Bonus in CRO
USDT - Up to 12% APR + 2% Bonus in CRO
DAI - Up to 12% + 2% Bonus in CRO
It is important to understand that there are three different terms offered by Crypto.com. Two of them require “locking” your funds for an amount of time, and the other is flexible in the sense that you can withdraw and deposit it at any point and time.
Flexible Earn Term (Not Locked)
Take a look at the flexible Bitcoin Earn term, you may earn 2% on your Bitcoin, and withdraw it at any point and time to do as you please with it.
1 Month and 3 Month Terms (Locked)
In order to get the highest interest rates for your savings account, you need to commit to locking your assets for a longer period of time. Either 1 month terms, or 3 month terms. The longer the term, the higher the interest rate. Your assets are not able to be moved, sold, retrieved, or withdrawn during this time.
Weekly Payouts
Crypto.com pays out the interest on a weekly basis. Again, the payouts can be rolled into a flexible earn term for a compounding effect, or taken to the Crypto.com Exchange to be reinvested or reallocated into other assets.
2% Bonus Paid in CRO
You may notice from one of the screenshots that I am earning an “extra” 2% APR on my Bitcoin. The extra 2% bonus is paid out in CRO and is a byproduct of having unlocked the “Icy White” tier of the Crypto.com platform. In order to explain how the 2% bonus works, I am going to use mocked numbers.
Let’s say I have locked 1 Bitcoin into the earn term at 6.5% APR + 2% Bonus (CRO). In this example, to keep the numbers simple, Bitcoin is $40k, and CRO is $0.10.
The amount of CRO bonus I get is based on the USD value of Bitcoin. So with the above numbers, my CRO bonus payout works like this.
$40,000 * 2% = $800 per year
$800 / 52 = $15.38 per week
$15.38 / $0.10 = 153.80 CRO per week
It is important to keep in mind that the prices of CRO and BTC are fluctuating massively on a daily, weekly, monthly, and yearly basis. So although this is the formula, the amount of CRO you will be receiving every week as a bonus is not easily calculated exactly. One thing can be said though. If the price of BTC rises faster than CRO, then I will get more units CRO for my bonus. Conversely, if CRO rises faster than BTC, I will get less units of CRO for my bonus.
Results of Using Crypto.com to Generate Passive Income
All payouts are paid out in the asset that you’ve locked up. That means if you’re locking BTC in an earn term, you get paid out in BTC. If you’re locking USDT and DAI, you get paid out in USDT and DAI. I really enjoy this schema because it means that as the value of Bitcoin goes up, the value of my interest payments go up as well. In other words, I am getting more gains on my received interest. I’ve been using Crypto.com Earn for more than a year now, and since then I’ve profited more than $10,000. Keeping inline with my strategy of never selling bitcoin, I can be sure that this number will continue to rise as the price of Bitcoin continues to rise.
How Does Crypto Earn Work?
When you are depositing your funds into Crypto Earn, you are lending your assets to the company Crypto.com. A portion of the assets are then loaned to 3rd parties at the sole discretion of Crypto.com. Another portion of the assets are loaned to borrowers on the Crypto.com platform (more on this in a future newsletter).
Why Do I Trust Crypto.com with my Money?
You might think that I keep all of my Bitcoin locked up in a fireproof safe. I do not. I have chosen to risk a subset of my assets in order to earn a yield through. However, I would not trust any platform to safely hold my Bitcoin. I have been scammed before, lost money to ponzi schemes as well as hacked exchanges. I trust Crypto.com for two reasons.
They have more insurance covering their assets than any other crypto company in the world ($360 Million)
They have more 3rd party security audits than any other crypto company in the world
These are all the ways I am using Crypto.com to net me some passive income. All the screenshots and numbers used in this letter are from my portfolio. This is the first of my private letters which will contain an analysis and usage of products that I use, test, and review.
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All The Best,
Keegan Francis
Disclaimer for Crypto.com
Crypto.com is a private company. They have in no way shape or form endorsed this email. All information and numbers in this email are subject to change on the sole discretion of Crypto.com. In the event that Crypto.com is insolvent, hacked, or is otherwise a scam, all investments and assets held on the platform may be lost. None of the information in this newsletter is an endorsement of Crypto.com’s services, and is not investment advice. Do your own research and invest only what you can afford to lose.