You can now get paid to own crypto.
One of the things that crypto critics have had my ear on for a long time was that crypto wasn’t about investing. It was about speculation.
And that was sort of true by definition. If cryptos are currencies, then you don’t invest in currencies. You speculate in currencies.
And you don’t “invest” in currencies because they don’t pay a return. It’s not like property, which pays rent, or stocks, that pay dividends.
You are purely hoping that the value of your currency goes up.
That’s not a reason not to get involved, but it’s good to know what you’re talking about.
But it is also no longer true that cryptos are not paying a return. Many are.
And the way they’re paying a return is through what is known as a ‘stake’. Essentially, you stake your holdings to help power the network, and in return you get paid a cut.
Long term readers would be well aware of the environmental concerns attached to crypto (particularly bitcoin) – the computing power required to mine new coins is significant.
…new crypto seeks to fix this issue by using a consensus method called “proof of stake”
Essentially all transactions taking place on a crypto network need to be validated – you take your coins and add them to a staking pool – the pool helps to validate the transaction and in turn pays you a reward in the form of interest.
Now obviously there are a lot more technical ins and outs but with returns of up to 20% depending on the coin you end up staking with, do we really care!
Until recently staking on an Australian based exchange was extremely limited. In fact you would have been hard pressed to find one.
Now we see one of Australia's biggest exchanges offering staking services and savvy crypto investors clearly have jumped at the chance.
Swyftx has become the first Australian crypto exchange to offer staking for multiple digital assets.
The Brisbane-based exchange saw $10 million in inflows an hour after launch yesterday, and by mid-morning had seen $77m after 12 hours of trading, a spokesman said.
The exchange is currently offering staking rewards for top 10 cryptos Solana, Cardano and Polkadot, along with Tezos, Cosmos (ATOM), Kava, Kusama and Algorand. VeChain, Polygon, NEO and Band Protocol are coming soon.
Rewards range from 4.9 per cent per year for Cardano to 20 per cent for Kava. Solana, the biggest crypto with staking rewards, offers 6.5 per cent returns. There’s no fees or lockup period.
Globally, over US$353 billion in value of crypto assets is staked, according to stakingrewards.com
Global social trading platform eToro began offering its Australian customers staking rewards from November 1 on Cardano and Tron, with more assets to come.
“The crypto ecosystem is expanding with the emergence of new altcoins,” eToro’s Australian managing director Robert Francis said last month.
“As a result we are seeing Australian investors looking at crypto beyond a store of value, instead using it as a way to diversify their portfolios beyond traditional assets like stocks, in order to hedge against risks such as inflation.”
Now, 6.5%+ is pretty juicy, but remember, you’re getting paid in the coin you’re staking, not in fiat, so you’ve still got to navigate a volatile market.
But with these kinds of returns, it’s pretty obvious why crypto is rapidly going mainstream.
The trick remains in knowing what coins are worth it and what's FUD…