The old adage goes, let your money work for you, and in crypto, it is no different. Obviously, anyone in the space is partially here because they view it as a sound investment, as cryptocurrencies tend to appreciate in value over time, and FIAT currencies vice versa. However, besides just watching your coins/tokens gain or lose value, you can receive passive income from a variety of classes of tokens. Let's get into the different kinds and some examples of blockchains that fit into these categories.
Proof of Stake:
Basically, instead of miners running hashing algorithms to secure a network, the network is secured through cryptographic proofs that involve staking coins in your wallet. In addition to this method being much more environmentally friendly, it also rewards users with coins in proportion to the ones they are holding. You would have to be running the node in order to validate transactions and earn rewards, so running a node on a low power device, such as a raspberry pi, should be considered. Nav Coin has around a 5% annual coin rewards for staking, and other coins vary with the emission rate.
Examples of Proof of Stake:
NAV Coin
PIVX
Cardano
Delegated Proof of Stake:
Much like PoS, DPoS uses stakers to validate transactions on the network. Where this varies from PoS is that users vote on delegates to represent them. Each blockchain varies in how it handles voting, governance, and emission rates. After you have voted for your delegates, you will receive staking rewards. The advantage of DPoS is that you don't have to be running a node in order to receive rewards. Another advantage of DPoS is that transactions are super fast due to the somewhat centralized network configuration.
Examples of Delegated Proof of Stake:
Ark
Lisk
BitShares
EOS (Upon launch of main net)
Masternodes:
Some cryptocurrencies have special validator nodes called Masternodes that perform functions such as instant transactions and coin mixing for anonymity. The nodes need a given amount of coins to do this, so to make a masternode, you have to lock up a certain number of coins and make it available to the network 24/7. In return, Masternode holders get portions of mining rewards. The first coin to utilize this system is DASH, one of the top coins out there. There are now many many many of these coins, go to masternodes.online to check them out. Be warned, a lot of them are utter shitcoins and could collapse towards zero at any moment, but you may be able to find some that you can make a profit from. In the examples below, I will stick to ones that are firmly established.
Examples of (non-shit) Masternode coins:
Dash
PIVX
ZCoin
Phore
Derivative Coins:
NEO might be my favorite because it is super simple. All you do is hold NEO in your own wallet and it generates a derivative token, GAS, as a result. Right now, NEO blockchain is feeless, but in the future it is expected that you'll use GAS for transaction costs. It has an annual generation rate of 3-5% (so if you have 100 NEO, you'd stand to get ~5ish GAS per year). The kicker here is that NEO is also an ICO platform, and most ICOs accept GAS, so it could be free money to gamble with.
VeChain will soon function very similarly to NEO. When their main net launches in June, the VEN tokens will generate Vechain Thor Tokens, which will similarly be used to pay transaction costs for VeChain. There are some key differences in how they work though. The Vechain Thor emission rate will vary in an attempt to stablize the price of the derivative coin, whereas NEO GAS is tied to the block creation rate. The other difference is that with NEO, you generate GAS directly related to the size of your bag, but with VeChain, if you hold over 10k, 50k, or 150k tokens, then you will get higher emission rates. So it is a mix of NEO's system and how masternodes work.
ERC20 Tokens:
So Smart Contracts can do a lot of things. Some of the functions require incentivizing holders to do certain tasks, thus rewarding them in some fashion. Many of these tokens involve locking up a certain amount of coins to perform oracle roles. One token, PayFair (PFR), uses smart contracts to perform escrow services, and rewards users for locking up tokens to facilitate the contracts. OmiseGo (OMG) will have a staking system of sorts as a part of it's exchange. ChainLink rewards tokens for perrforming oracle tasks. Subtratum will reward tokens for routing/hosting/serving internet traffic in its crypto DNS service. I'm sure there are countless more tokens that offer passive income rewards, so look around on this front.
Disclaimer: I am not a financial advisor and none of this should be considered investment advice. Please DYOR!
If you have any other passive income coins that you like that I didn't cover, please mention them in the comments :-)