One of the best and smartest ways to earn a passive crypto income is by investing in dividend tokens such as KuCoin Shares (KCS), Nexo (NEXO), and CoinEx (CET) Tokens.
Most people think that the only way to make money in crypto is by trading, staking, lending, mining or simply buying and HODLing.
In as much as the above are legit and possibly lucrative opportunities in themselves, dividend tokens are arguably the smartest route to passive crypto income and I want to show you how to take advantage of them for maximum profits in the rest of this article.
So without wasting any time let’s take a closer look at:
- What dividend tokens are,
- The top 3 dividend tokens you can invest in today,
- Why investing in dividend tokens might be the smartest choice, and
- How to maximize your returns without taking extra risks.
What Are Dividend Tokens
Dividend tokens are cryptocurrencies that pay out regular dividends out of their daily profits. These tokens are similar to traditional dividend-bearing stocks; however, unlike stocks, dividend token holders do not have ownership rights in the issuing projects or organizations.
Most dividend tokens are issued by cryptocurrency exchanges such as KuCoin Shares (KCS), CoinEx Token (CET), etc. which are issued by their respective exchanges.
Many people confuse staking coins and security tokens for dividend tokens –they’re not the same, even though they share very striking similarities.
For example, whereas staking pools and exchanges usually offer their investors a fixed annual rate of return, dividend tokens returns vary with the revenue of the issuing platform or organization. However, some dividend tokens have staking features but they are not exactly like staking coins.
The more profitable the platform gets, the higher dividends its investors earn and vice versa.
More so, whereas staking confers certain rights, privileges, and responsibilities on the stakers –such as voting rights, securing the blockchain, etc. investors in dividend tokens simply earn their regular returns without any voting rights or participation in the blockchain network activities of the issuing platform.
Top 2 Dividend Tokens You Can Invest in Today
- KuCoin Shares (KCS)
- Nexo (NEXO) Token
- CoinEx Token (CET)
1. KuCoin Shares (KCS)
KuCoin Shares is an Ethereum (ERC-20) based cryptocurrency token with a maximum supply of 200 KCS and the native cryptocurrency of the KuCoin Exchange.
Through the KuCoin Bonus Program, holders of a minimum of 6 the KCS token enjoy a share of the daily profits of the exchange.
The KuCoin Exchange shares 50% of its daily trading fee-earnings from both the spot and derivatives markets with holders of the KCS token.
The amounts of KuCoin Shares you earn as a dividend is proportionate to the amount of KuCoin Shares you hold in your KuCoin Exchange account.
The more KCS you HODL in your KuCoin Exchange Account, the more KCS you earn daily. Just buy the KCS and leave them in your account and you will earn a share of the daily dividend payout.
KCS seems to offer both the highest level of flexibility and potential returns. No KYC required before earning dividends, no complex token lockup processes and special requirements.
Just open a KuCoin Exchange Account, purchase KCS and continue with your normal life while your daily bonus is automatically deposited into your account.
2. Nexo (NEXO) Token
Nexo is the world’s first instant crypto-backed loan platform that offers you the opportunity to enjoy your crypto wealth today without selling your crypto assets.
This acclaimed, SEC-approved, BitGo insured, asset-backed, loan platform pays 30% of its Net Profit in the form of dividends, distributed proportionally among all Nexo Tokens staked or held on the Nexo Platform.
Regardless of how many Nexo (NEXO) tokens you can afford, if you satisfy the following conditions you will be qualified to receive a share of the 30% annual dividend payout.
- You must undergo a one-time KYC (Advanced level) verification as Nexo is a fully compliant financial institution. Nexo’s KYC process is straightforward, fully automated, and usually takes less than 2 minutes.
- NEXO Tokens must be held or staked in your Nexo Wallet at the exact dividend date, which is usually ten (10) days before the dividend distribution date.
So far the platform has made only 2 dividend payments. The first was paid on the 15th of December 2018 and the second was paid on the 15th of August 2019.
The year 2020 dividend was not yet paid at the time of writing this article.
3. CoinEx Token (CET)
CET is the native cryptocurrency of the Bitmain invested (or owned) CoinEx Exchange.
The exchange allocates 80% of its transaction fee revenue from both its spot and crypto derivatives market as dividends to all CET holders.
Similar to KuCoin’s KCS bonus program, all you need to do is buying and hold CET within your CoinEx account and earn the accruing monthly rewards.
However, unlike KuCoin that only pays dividends on tokens held within the Exchange, CoinEx pays you dividends even if your token is held in an external CoinEx supported wallet.
Why investing in dividend tokens might be the smartest choice
The concept of dividend tokens was borrowed from the traditional equity market where investors subscribe to shares of real companies and enjoy regular dividends and limited ownership rights in the respective Companies the own their shares.
Dividend tokens may be the best passive crypto income opportunity right now for many reasons:
- Potential returns are relatively higher compared to staking rewards, lending interests, and mining.
- Your potential income is not fixed. Meaning the more money the issuing platform makes from its operations, the more dividends accrue to investors. However, you must also note that the less money the platform makes the less your potential returns.
- Compared to traditional equities, you do not share in the risk or liability of the platform. If an exchange runs into problems, for example, you still hold claims to your investments.
- While enjoying your dividend some platforms like KuCoin still give you the privilege of trading your tokens in the crypto market.
How to maximize your returns from dividend tokens without taking extra risks.
Maximize Returns with NEXO Token
Claim and re-invest your earnings for compounding returns.
Let’s imagine you held 1000 NEXO tokens earned your share of the 30% Nexo annual dividends payout which amounts to 10 extra NEXO for you.
Now you have 1010 Nexo tokens to put back into the system. Thus compounding your earnings and increase your profitability.
In no time you would have recovered and possibly doubled your initial investment without having to invest more of your money.
Maximize Returns with KuCoin Shares (KCS) Token
One reason why we love the KCS bonus program is the high level of flexibility it affords investors. Dividends are paid every 24 hours and credited to your bonus account which you can withdraw to your regular account so that you can earn a dividend on the previously received dividend. Thus compounding your earning as suggested above.
More so, you can take advantage of market movements with your KCS without sacrificing the bonus.
For example, you are holding 10,000 KCS in your account and earning daily rewards and come tomorrow the KCS price blew up by more than say 25%, -you sell your holdings and wait a day or two or even 1 week to buy back the retracement and then continue earning your dividends within the next 24 hours of buying back.
The profit from the market movement is far greater than the 1 to 5 days bonus you probably will miss due to selling your KCS.
Also, this is how your investment looks like:
- You benefit from any potential price appreciation of the token
- You increase the number of tokens you have from the dividends
- You increase the number of tokens you have through buying back after selling at the top
- You are earning dividends on your dividends and profits
Your portfolio after 1 or 2 years of consistently taking advantage of the market in this manner will eclipse your initial investment.
The same approach applies to CoinEx Token (CET) as they’re almost exactly the same except that CoinEx offers support for external wallets and pays a higher dividend allocation of 80% of profits compared to KuCOin’s 50%.
Potential Problems and Disadvantages of Dividend Tokens
- The United States, Securities and Exchange Commission considers all dividend-paying tokens as securities. This could pose serious legal and regulator problems to the issuing problem and as the SEC can clamp down on them any time and disrupt their operations especially if they serve the US market.
- You will lesser or even no dividends if the platform does not turn a profit. More so, your earnings can fluctuate and make it impossible for you to plan and budget with if you hope to do anything with the potential accruing returns.
- If you invest in the wrong dividend tokens you could be losing both your initial investment and all earned profits reinvested if they exit-scam. Therefore, performing due diligence before committing to any platform is paramount if you want to be a successful investor in dividend tokens.
- The fourth point is similar to the above. Imagine earning on the average 10% annual return on your investment and the token you bought is down by 70%. You earned dividends quite alright but your investment is down by 60%. Invest in quality projects with solid fundamentals and strong business models.
- The platform can change their rewards structure at any time under short notice without consequences. They can cancel the offer outright for many different reasons. As a result, result; remember to always have a plan B. Never put all your egg in one basket and never risk what you can’t afford to lose.
Summary of the Best Dividend Tokens for Passive Crypto Income
- Dividend tokens offer some of the best investment opportunities in the crypto space.
- Two solid dividend tokens you can invest in today with a high degree of assurance are KCS and NEXO tokens (not financial advice and no guarantees but they’ve got the potentials).
- Re-investing your earnings and taking advantage of market movements are two sure ways of building up your wealth fast with dividend tokens.
- Choosing the right projects to invest in may be the difference between losing your money and growing your wealth.
- No guarantees in this market. Be vigilant and monitor your investments. Don’t hesitate to pull the plug when things begin to turn in a way that’s not good for your investment. You can always re-invest back when things are normal.
This is by no means an exhaustive list of the best dividend tokens out there.
What other good dividend tokens(s) are you invested in, share with us in the comments section below.
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