Sweet, sweet rewards. Who isn’t a fan? In finance, a reward is usually something for nothing, whether that’s a bit of interest on your savings, cashback on a credit card or a dividend payout from a stock.
While the whole idea of blockchain, and especially DeFi (Decentralised Finance) is to do with traditional banks and government-controlled money, one thing the crypto and traditional financial world both agree on are rewards because, well, why wouldn’t they?
From a business perspective, they are incentives: use us and we’ll give you this thing for “free”. That’s the transaction. In that sense, it works the same in crypto. But, with this being crypto, there are a few ways of learning the ropes that you wouldn’t get with traditional money.
Cool, so what rewards are there?
There’s a fair few actually, and they’re becoming more and more accessible. You can get crypto debit cards that offer cash back, earn rewards when you “stake” coins (more on that later), and even earn them just for using apps made by these companies (in some cases just holding a certain coin will earn you interest) and you can earn by learning about crypto, which is kind of a double win really. Generally, these rewards are given in the form of a free bit of whatever crypto you’re using, but sometimes you might earn a different coin to the one you’re mainly using. You can always exchange it for another crypto, though.
Woah, loads of things. So how does staking work?
Staking is the process of locking up a portion of your assets for a certain period of time. They’re still yours, but during the time they’re locked up you can’t access the coins. The staked coins are put to work on the blockchain and they’re used to regulate transactions. The more staked coins there are, the quicker the network becomes. The main risk is that the value will still fluctuate as normal (except for the added interest), which means that if the coin tanks in value you can’t sell it. Needless to say, do your research before deciding which coins to stake and how much of the coin.
How much can you earn by staking?
It varies across coins, and where you stake it. Cryptocurrency exchanges like binance, coinbase, crypto.com, KuCoin and others offer staking options and they’ll tell you what the average rewards are for each coin there. On crypto.com, for example, the returns range between three per cent and a massive 12.5 per cent across coins including bitcoin, ethereum, solana, cardano, CRO (its native coin) and more. Polkadot is the coin returning 12.5 per cent at the time of writing. Most savings accounts in the UK are at less than two per cent, by contrast.
Decent, so where’s a good place to earn?
For staking, the places mentioned above work well. When it comes to most other things, though, crypto.com seems to love dishing out rewards. The crypto debit cards offer cashback, the app offers the opportunity to stake a variety of coins for up to three months at a time, but they also have a flexible option that will earn you less but you can pull out the coins at any time. They also have a “supercharge” staking option sometimes (which is staking but with a bigger interest for a limited time only, on certain coins, now and again).
There’s also something they call “missions” for which you get “diamonds” that you can use to redeem a “mystery box”, which gives you free CRO. Usually, you’ll get around one CRO or less, which at the time of writing is £0.42, but you can get as much as £820 as of November 2021. So their app (which also holds their crypto exchange) is a pretty good place to check out different types of rewards. They also offer those crypto debit cards which give you rewards but they involve spending crypto. And for the big perks, you have to put a lot of crypto into your account (as much as £300,000 of CRO) and you have to keep it there for 180 days before you get the card. Even their free card will get you one per cent cashback on purchases!
What about crypto mining?
It’s a reward, sure. You mine coins basically out of nowhere and then you’re given a percentage of them. So yeah, that’s a reward in a sense. But realistically, unless you have that set up on a large scale, mining isn’t really worthwhile at all. The running costs (not to mention buying the equipment) means you’ll be mining a lot before you actually get any profit. The other reward options can be as simple as tapping a few buttons.
So yeah, it turns out that even beyond the mad ups and downs a cryptocoin’s value can have, there are ways to earn a little on the side. Sometimes it’s as easy as just having a bit of a play on the dedicated apps. Perhaps you can add “getting to know these new, potentially money-earning apps, instead of doomscrolling Twitter all the time” to those New Year’s resolutions you may or may not stick to. Good luck!