For decades, stock investors have relied on dividends as a source of steady income, but did you know that there are cryptocurrencies that pay dividends? Although they are not stocks, dividend-paying cryptocurrencies can take you a long way in generating profits.

Instead, they’re digital assets that reward HODLers (check glossary for meaning) through staking, masternodes, or profit-sharing programs.

This innovation has opened a new world of passive income crypto opportunities, allowing investors to earn rewards simply by holding or locking up tokens.

Unlike traditional companies that distribute a portion of their profits to shareholders, cryptocurrencies that pay dividends typically use blockchain mechanisms such as staking or validator rewards.

Some platforms even share exchange trading fees with their token holders, creating a consistent earning model for long-term investors.

If you’ve been looking for ways to diversify your income beyond stock markets, then crypto dividends could be the game-changer you’ve been waiting for.

In this article, we’ll explore 12 best cryptocurrencies that pay dividends and at the same time help you generate passive income in 2025 and beyond.

In addition, we will explain how these systems work, and give you tips on choosing the right tokens.

But first, let’s break down what dividend paying cryptocurrencies are and why they’ve become such a hot topic among crypto enthusiasts.

What Are Dividend-Paying Cryptocurrencies?

Dividend-paying cryptocurrencies are digital assets that provide token holders with regular rewards, like dividends in traditional finance.

Instead of relying on company profits, these crypto dividends usually come from one of the following sources:

• Staking Rewards: By locking up your tokens to help secure the network, you earn interest in the form of additional tokens.
• Masternode Rewards: Running a masternode requires holding many tokens, and in return, you receive rewards for validating transactions.
• Exchange Profit Sharing: Some centralized exchanges share trading fee revenue with holders of their native tokens.
• DeFi Profit Distribution: Decentralized finance projects distribute a portion of their protocol revenue to token stakers.

The most common approach is staking (refer to the Glossary for meaning), where investors delegate their tokens to a validator or run their own node.

Unlike traditional dividends that are paid quarterly, crypto dividend payouts can be daily, weekly, or monthly, making them appealing for those seeking passive income from crypto.

Why Invest in Cryptocurrencies That Pay Dividends?

There are several reasons why savvy investors are turning to cryptocurrencies that pay dividends as part of their portfolio strategy.

Here are the main reasons:

Consistent Passive Income

When you hold a dividend crypto coin, you’re not just relying on price appreciation. Even during market dips, staking rewards or revenue-sharing programs can keep generating income.

This steady stream of passive income crypto makes dividend-paying tokens attractive to long-term holders.

Compounding Growth

By reinvesting your crypto dividends, you can leverage the power of compounding, just like traditional dividend stocks. Over time, this can significantly boost your overall returns, especially if the token’s price also appreciates.

Diversification Beyond Traditional Markets

Dividend-paying cryptocurrencies provide an alternative income stream outside the stock market.

For investors looking to hedge against inflation or explore decentralized finance opportunities, these tokens offer a unique advantage.

Staking Rewards and Governance

Staking not only earns you rewards but also gives you voting rights on protocol decisions. This means you have a say in the future direction of the project—a level of engagement that traditional dividends don’t offer.

However, it’s important to note that crypto dividends are not risk-free. Volatility, regulatory changes, and security risks can all impact your earnings. That’s why due diligence is crucial before investing in any dividend crypto tokens.

12 Best Cryptocurrencies That Pay Dividends

Now, let’s dive into the top 12 dividend-paying cryptocurrencies that can help you earn passive income in 2025 and beyond.

Each of these coins has a unique model for distributing rewards, whether through staking, masternodes, or exchange profit-sharing.

1. NEO (Earn Gas Rewards)

NEO is often referred to as the “Ethereum of China,” and it’s one of the earliest cryptocurrencies that pays dividends through a mechanism called GAS.

When you hold NEO tokens in a compatible wallet, you automatically receive GAS tokens, which are used to pay for transaction fees on the NEO network.

• How it works: NEO holders don’t need to stake their tokens; just holding them in a supported wallet generates GAS.
• Dividend type: GAS token rewards.
• Why it’s popular: It’s simple and requires no technical setup, making it ideal for beginners looking for passive income crypto opportunities.

2. VeChain (VTHO Rewards)

VeChain is a blockchain platform focused on supply chain management and logistics. Like NEO, it uses a dual-token system: VET and VTHO.

Holding VET generates VTHO tokens, which are used for transaction fees on the network.

• How it works: Simply store your VET tokens in a wallet, and you’ll earn VTHO daily.
• Dividend type: VTHO token generation.
• Why it’s unique: VeChain has strong partnerships with major companies, adding a layer of trust to its ecosystem.

3. KuCoin (KCS Bonus Program)

KuCoin, a popular crypto exchange, rewards its token holders with a share of trading fees through the KuCoin Bonus program.

If you hold KuCoin Shares (KCS), you receive daily dividends in the form of various cryptocurrencies.

• How it works: Hold a minimum amount of KCS on the exchange, and you’ll get a daily payout from trading fees collected by KuCoin.
• Dividend type: Daily payouts in multiple cryptocurrencies.
• Why investors love it: The more the exchange grows, the higher the potential rewards.

4. Ontology (ONG Rewards)

Ontology is a blockchain network designed for decentralized identity and data management.

Like NEO and VeChain, it uses a dual-token model: ONT (the main token) and ONG (Ontology Gas).

When you hold ONT tokens, you earn ONG tokens as crypto dividends.

• How it works: Hold ONT in a compatible wallet, and you’ll earn ONG automatically without needing to stake actively.
• Dividend type: ONG token generation, which is required for transaction fees on the Ontology network.
• APY Estimate: Rewards are modest, typically ranging between 1% and 3% annually.
• Why it’s attractive: Passive earning without complicated staking steps.
• Risks: ONG value depends on Ontology’s ecosystem growth; limited adoption could impact rewards.

5. Tezos (XTZ Baking Rewards)

Tezos is a smart contract platform often compared to Ethereum. It introduced an innovative consensus mechanism called Liquid Proof of Stake (LPoS), which allows users to “bake” their tokens for rewards.

• How it works: Stake your XTZ tokens by delegating to a validator or running your own baking node.
• Dividend type: Staking rewards paid in XTZ tokens.
• APY Estimate: Usually between 5% and 6% per year, depending on the baker and fees.
• Why it’s attractive: Tezos offers steady staking returns with relatively low hardware requirements.

Risks: Requires locking tokens for a certain period; slashing risk if validators misbehave.

6. Cosmos (ATOM Staking Rewards)

Cosmos is known as the “Internet of Blockchains,” connecting multiple chains for interoperability.

ATOM, its native token, can be staked to earn dividends in the form of more ATOM tokens.

• How it works: Delegate ATOM to a validator and earn staking rewards.
• Dividend type: ATOM tokens as staking rewards.
• APY Estimate: Approximately 9% to 12% annually, varying by validator.
• Why it’s attractive: High reward rates and strong adoption of the Cosmos ecosystem.
• Risks: Validator risk and inflation rate; tokens must be locked during staking period.

7. Algorand (ALGO Governance Rewards)

Algorand is a scalable, secure blockchain platform using a pure proof-of-stake (PPoS) consensus mechanism.

It rewards participants through governance and participation programs.

• How it works: By holding ALGO and participating in governance votes, you earn governance rewards.
• Dividend type: ALGO tokens credited periodically.
• APY Estimate: Between 4% and 6% per year, depending on participation.
• Why it’s attractive: Simple process, no complicated staking setup, plus eco-friendly network design.
• Risks: Participation requirements; rewards decrease if governance program changes.

8. DASH (Masternode Rewards)

DASH is a privacy-focused cryptocurrency that uses a masternode system to power features like InstantSend and PrivateSend. Masternode operators earn rewards for validating transactions.

• How it works: To run a DASH masternode, you need to lock 1,000 DASH tokens.
• Dividend type: Masternode rewards, paid in DASH.
• APY Estimate: Roughly 5% to 7% annually, but it depends on network conditions.
• Why it’s attractive: Strong community and a proven masternode model.
• Risks: High capital requirement (1,000 DASH), plus potential price volatility.

9. Pundi X (PUNDIX Rewards)

Pundi X is a blockchain project focused on enabling cryptocurrency payments for retail transactions.

In its early days, it distributed NPXS tokens as rewards, but now it uses PUNDIX after token migration.

• How it works: Hold PUNDIX tokens in a supported wallet to earn periodic rewards from the network’s transaction fees.
• Dividend type: Additional tokens as incentives.
• APY Estimate: Varies greatly; depends on network adoption and transaction volume.
• Why it’s attractive: Designed for real-world crypto payments adoption.
• Risks: Project adoption has slowed; long-term sustainability is uncertain.

10. COSS Token (Exchange Fee Sharing)

COSS was once a crypto exchange token offering revenue sharing. Although its popularity has faded compared to KCS or BNB, it remains a historical example of exchange-based crypto dividends.

• How it works: Token holders receive a portion of exchange trading fees.
• Dividend type: Revenue-sharing in multiple crypto assets.
• APY Estimate: Highly variable and exchange-dependent.
• Why it’s notable: One of the pioneers of fee-sharing tokens in the crypto space.
• Risks: Exchange tokens depend heavily on the platform’s success and user base.

11. Decred (DCR Staking Rewards)

Decred is a hybrid blockchain combining proof-of-work and proof-of-stake for governance and security.

By staking DCR, participants earn a share of block rewards.

• How it works: Lock DCR in a staking pool or run a voting wallet to earn dividends.
• Dividend type: DCR token rewards.
• APY Estimate: Between 6% and 9% annually, depending on network conditions.
• Why it’s attractive: Strong focus on decentralization and community governance.
• Risks: Technical setup complexity and volatility of DCR price.

12. ICON (ICX Staking Rewards)

ICON is a South Korean project focused on interoperability between blockchains. By staking ICX, holders earn dividends in the form of more ICX.

• How it works: Stake ICX using ICON’s network or a supported wallet.
• Dividend type: Staking rewards paid in ICX.
• APY Estimate: Around 7% to 10% annually, depending on network conditions.
• Why it’s attractive: ICON has strong partnerships in Korea, which adds credibility.
• Risks: Like other staking coins, rewards depend on long-term project sustainability.

How to Choose the Right Dividend-Paying Cryptocurrency

Not all dividend-paying cryptocurrencies are created equal. Some offer stable and predictable rewards, while others come with high risk and uncertainty.

To ensure you choose the right option for your portfolio, here are key factors to consider:

Reward Mechanism

Different cryptocurrencies use different reward models: staking, masternodes, exchange profit-sharing, or dual-token systems.

For example, Tezos and Cosmos offer predictable staking rewards, while KuCoin shares exchange fees with its token holders.

If you prefer a straightforward approach, look for coins that require minimal technical setup, such as NEO or Ontology, where rewards are automatic.

Annual Percentage Yield (APY)

APY varies widely between tokens, ranging from as low as 1% (for low-risk assets) to over 12% (for high-risk options).

While a higher APY might seem attractive, it usually comes with added risks, such as inflationary tokenomics or uncertain project sustainability.

Research how the rewards are generated—are they funded by real revenue or just inflationary token distribution?

Lock-up Period and Liquidity

Some staking systems require locking your tokens for days or weeks, which can limit your flexibility.

For example, DASH masternodes require 1,000 DASH to be locked up, while Tezos and Algorand allow more flexible delegation.

If liquidity is important to you, choose tokens with shorter lock-up requirements or liquid staking solutions.

Platform and Project Reliability

Always evaluate the project’s fundamentals before investing. A token that promises high returns but lacks adoption or transparency is a red flag.

Check for strong use cases, active development teams, and real-world partnerships.

Projects like Cosmos and Algorand have proven track records, making them more reliable choices.

Risk Tolerance

Lastly, understand your risk appetite. High APY often equals higher volatility and project risk.

If you’re risk-averse, stick to established coins with strong communities rather than speculative tokens.

How to Earn Passive Income with Crypto Dividends

Generating passive income from cryptocurrencies that pay dividends can be done in several ways, each with its own setup requirements and risk profile.

Here are the most common strategies:

Staking

Staking is the most popular way to earn crypto dividends. By locking your tokens in a wallet or delegating them to a validator, you help secure the network and, in return, earn rewards.

Examples include Tezos (XTZ), Cosmos (ATOM), and Algorand (ALGO).

• Pros: Simple setup through exchanges or wallets, predictable returns.
• Cons: Requires locking tokens for a set period and carries validator risk.

Running a Masternode

Masternodes are servers that support the blockchain network in return for rewards. Projects like DASH and Decred use this model.

• Pros: High reward potential and involvement in governance.
• Cons: Requires significant investment (e.g., 1,000 DASH), technical expertise, and constant uptime.

Exchange Profit Sharing

Centralized exchanges such as KuCoin reward token holders with a share of trading fees.

This is known as a fee-sharing model, and it can generate daily payouts without the need for complicated setups.

• Pros: Easy to start, rewards are paid in multiple cryptocurrencies.
• Cons: Dependent on exchange performance and trading volume.

DeFi Profit Sharing

Decentralized finance platforms distribute a portion of their revenue to token stakers or liquidity providers.

This method is common in projects offering yield farming or revenue-sharing tokens.

• Pros: Higher returns than traditional staking.
• Cons: Higher risk due to smart contract vulnerabilities and impermanent loss.

By combining these strategies, you can create a diversified passive income portfolio. However, always research the project and use secure wallets to minimize risk.

Risks of Investing in Dividend-Paying Cryptocurrencies

While earning crypto dividends sounds appealing, it’s important to understand the risks before jumping in:

Market Volatility

Unlike traditional dividends, which are usually paid in fiat, crypto dividends are paid in tokens that can fluctuate wildly in price. A 10% APY means little if the token’s price drops by 50%.

Network and Validator Risks

For staking-based rewards, your earnings depend on validator performance. If a validator misbehaves or gets penalized (slashed), you could lose part of your stake.

Always delegate to reputable validators.

Platform Risk

Projects offering revenue-sharing models, such as KuCoin, depend on the success of the exchange. If the platform faces regulatory issues or suffers a security breach, dividend payouts could stop.

Lock-Up and Liquidity

Many staking systems require you to lock tokens for a set period, limiting your ability to exit during market downturns. This can lead to unrealized losses if prices drop during the lock-up phase.

Inflationary Tokenomics

Some projects issue new tokens to fund rewards. While this creates short-term gains, it can lead to inflation and long-term devaluation of the token.

Regulatory Uncertainty

Dividend-paying cryptocurrencies may fall under securities laws in some jurisdictions.

This could lead to legal restrictions or delistings from exchanges, impacting liquidity and accessibility.

Understanding these risks allows you to make informed decisions and avoid common pitfalls when investing in dividend crypto coins.

FAQs About Dividend-Paying Cryptocurrencies

Q: Do cryptocurrencies really pay dividends?

A: Yes, certain cryptocurrencies provide rewards to holders through staking, masternodes, or revenue-sharing models. These are often referred to as crypto dividends, although they differ from traditional stock dividends.

Q: What is the best cryptocurrency for passive income?

A: Popular options include Tezos (XTZ), Cosmos (ATOM), and Algorand (ALGO) for staking. For exchange-based dividends, KuCoin (KCS) is a strong choice.

Q: Are crypto dividends taxable?

A: In most jurisdictions, rewards earned from staking or other income-generating activities are taxable. Always consult local tax laws or a financial advisor to remain compliant.

Q: Can I lose money while earning crypto dividends?

A: Yes. Even if you earn rewards, the underlying token price can drop significantly. Always factor in market volatility when calculating returns.

Q: How often do crypto dividends pay out?

A: It varies by project. Some pay daily (KuCoin), others weekly or monthly (staking tokens like Tezos or Algorand). Always check the reward schedule before investing.

Conclusion

Cryptocurrencies that pay dividends offer an exciting opportunity for investors seeking passive income crypto strategies.

From staking coins like Tezos, Cosmos, and Algorand to profit-sharing tokens like KuCoin, there are numerous options to explore.

However, these opportunities come with risks—market volatility, network security, and regulatory uncertainty can all affect returns.

If you’re new to the space, start with simple staking coins like Algorand or Tezos, which offer predictable rewards and low technical barriers.

For advanced users, masternodes like DASH can deliver higher returns but require significant investment and technical know-how.

As with any investment, do your research, diversify your portfolio, and never invest more than you can afford to lose.

By carefully selecting dividend-paying cryptocurrencies, you can tap into one of the most innovative ways to earn passive income in the digital economy.

Last Updated on: August 27, 2025