Module 15: Crypto in Your Personal Finances
Crypto Income: Staking, Yield, and Lending
Chapter 10 of 12 · about 4 minutes
10.1 Living off yield?
Mint saw a post: "I live off my crypto yield. 15% a year on stablecoins, no job needed."
"Could that be real?" Mint asked.
"Sometimes, briefly," said Hash. "But a yield high enough to live on usually comes with risk high enough to lose the principal. Modules 9 and 10 showed where yields come from. This chapter is about fitting crypto income sensibly into your finances."
10.2 Sources of crypto income
| Source | Typical risk level | Module |
|---|---|---|
| Staking ETH or other proof of stake assets | Moderate: price risk, protocol and custody risks | Module 9, Chapter 8 |
| Stablecoin lending on established DeFi protocols | Moderate: smart contract, stablecoin, and protocol risks | Module 9, Chapter 5 |
| Tokenised government bonds | Lower: issuer and legal structure risks | Module 11, Chapter 7 |
| Liquidity provision | Moderate to high: impermanent loss | Module 9, Chapter 4 |
| Covered calls and option selling | Moderate to high: capped upside, crash exposure | Module 8, Chapter 12 |
| Basis trades and synthetic dollars | Moderate to high: funding and exchange risk | Module 7, Chapter 12 |
| High-yield farming and points | High | Module 9, Chapter 10 |
| Centralised crypto lending platforms | Varies; several failed in 2022 | Module 1, Chapter 7 |
10.3 Compare with safe yields
The key benchmark is what you could earn with very little risk, such as short-term government bonds or insured savings accounts in your currency (Module 10, Chapter 2).
| Yield offered | Compared with a 4% safe yield | What it suggests |
|---|---|---|
| 4% | About the same | Little reason to take extra crypto risk for stablecoin yield |
| 6% | 2 points more | Moderate extra risk |
| 15% | 11 points more | Significant extra risk, often temporary or subsidised |
| 50%+ | Far more | Very high risk, often unsustainable (Module 9, Chapter 10) |
"So the extra yield over the safe rate is the payment for extra risk," said Mint.
"Exactly," said Hash. "Ask whether that payment is worth the chance of losing the principal."
10.4 Income in volatile assets
Staking rewards paid in ETH, for example, are a percentage of a volatile asset. A 3% yield doesn't help much if ETH falls 50% (Module 5, Chapter 3).
| Year 1 | |
|---|---|
| ETH held | 10 ETH at $3,000 = $30,000 |
| Staking yield | 3%, or 0.3 ETH |
| ETH price falls 50% | 10.3 ETH × $1,500 = $15,450 |
| Result | Down about 48.5% in dollar terms |
Staking increases the amount of ETH you hold, which helps over long periods if you believe in ETH, but it doesn't protect against price falls. It also usually creates taxable income (Module 14).
10.5 Fitting income into your plan
| Principle | Why |
|---|---|
| Don't rely on crypto income for essential expenses | Yields and principal can fall sharply |
| Count crypto yield within your crypto allocation, not separately | It carries crypto risks (Chapter 4) |
| Diversify across income sources and platforms | Avoid single points of failure (Module 9, Chapter 12) |
| Track taxable income (Module 14) | Rewards are often taxed when received |
| Keep emergency funds outside crypto yield products | Withdrawals may be delayed in a crisis (Module 9, Chapter 5) |
10.6 Mint's approach
| Holding | Income approach |
|---|---|
| Core ETH | Staked through a large, established liquid staking protocol, no leverage |
| Core BTC | Held in self-custody, no yield; Mint decided BTC yield products added custody or bridge risk not worth the extra return |
| Stablecoin reserve | Part in tokenised government bonds where eligible, part in an established lending protocol |
| Emergency fund | In a regular insured savings account |
"My crypto earns a modest amount," said Mint. "But nothing I depend on, and nothing that could take the principal with it."
10.7 Try it yourself
List every crypto yield or income source you use or are considering. For each, write the yield, where it comes from, the main risks, and how it compares with a safe yield in your currency. Then check whether any money you need for essentials or emergencies is in a yield product.
Key takeaways from this chapter
- Crypto income sources range from relatively lower-risk tokenised bonds to high-risk farming and points.
- Compare crypto yields with safe yields; the difference is payment for extra risk.
- Very high yields are often temporary, subsidised, or risky enough to threaten the principal.
- Yield in volatile assets doesn't protect against price falls.
- Don't rely on crypto income for essentials; keep it within your crypto allocation and track taxes.
- Keep emergency funds outside crypto yield products.