Want to have some passive income? You may try Staking – Know how it’s different from FD

Staking is one of the ways to earn passive income by investing in crypto currencies, which is emerging fast as an alternative investment option. The Supreme Court order to lift the RBI ban on crypto trading in India has also provided a boost to the crypto traders and investors.

Staking is a way of investing, where, apart from the opportunity to trade, an investor can also earn rewards by holding crypto coins.

The following F&Qs – by Nischal Shetty, CEO & Founder, WazirX – would help in making the concept clear:

How users can earn passive income from Staking?

Staking is the process of depositing and holding funds in a wallet or an exchange to support the security and operations of a proof-of-stake blockchain network. In return, users receive rewards for this.

“WazirX staking is very simple. All you need to do is buy or deposit a PoS token, and hold at least a minimum balance of it on WazirX. We don’t even lock users’ tokens. Users can trade any time, and when their funds are idle, they get staking rewards. This is the best of both worlds,” says Shetty.

How Staking is the form of investment than FD, RD’s?

In case of fixed deposits, your amount is locked for you to gain interest on it. But Staking allows trading as well as earning rewards by holding.

“On WazirX, you can stake as well as trade at the same time. Moreover, the lowering of bank interest rates has sparked demand for alternative ways to earn interest on holdings. Staking allows you to earn interest without any counter-party risk,” Shetty explains.

What is the minimum and maximum range of tokens we should have?

Every token has a different limit. For example, for TRON, the minimum holding amount is 500 TRX. For Tezos, the minimum amount is 3 XTZ.

How has the app helped in earning more interest?

The lack of trading expertise and crypto knowledge are still the two key barriers to crypto adoption in India. We have introduced staking to involve crypto enthusiasts into crypto and grow the ecosystem.

“With WazirX staking, enthusiasts who don’t have the time or skills to trade can also participate in crypto and earn yields. This approach to staking taken by us makes it convenient for people to get staking rewards, and allows them to trade and sell tokens any time they want. If a user wanted to stake on their own, they would have to stake the entire token. This means they would not be able to trade, and if they wanted to trade, they would not be able to stake it. Our approach allows people to earn the benefit of staking while trading on WazirX,” elaborates Shetty.

How much returns it may give?

Staking gives an annual return of anything between 2 – 16 per cent. For example, the annual yields for SXP are 4 – 9 per cent, and for SXP, it’s 4 – 12 per cent. The yield depends on the project, and a user’s token holdings ratio.

How much would be the risk to capital invested?

Traditionally, staking required transfer of funds, a second wallet, and a procedure where you risk losing your tokens too.

“With staking on WazirX, there’s no lock-up period, and you can sell or withdraw your tokens any time you want to. I also want to add that one of the reasons we didn’t jump into staking immediately is that we wanted to understand from a user perspective how safe these initiatives are. We took time to test and try it out. When we were convinced that it’s a safe approach for our users, we decided to bring it,” Shetty explains.