In simple terms, staking is a source of passive income from holding crypto or stablecoins in your account. The entire process is based on the Proof of Stake (PoS) algorithm. Using PoS, you can protect the blockchain from interference and unreliability of the posted data. In return, users receive incentives calculated as a percentage of profitability.
Today, another way of earning passive income from digital assets is becoming increasingly popular, which is a type of staking – these are crypto savings accounts, similar to fiat savings accounts in traditional banks. This is an easy way to make money because it does not require active trading or active investing in other assets. Below we take a look at some of the leading providers offering crypto savings account services: Binance, Nexo and CoinDepo.
Binance Simple Earn: From staking to fixed and flexible deposits
Binance, the largest cryptocurrency exchange by daily trading volume, provides the SAFU (Secure Asset Fund for Users) to safeguard users’ assets. Additionally, 10% of trading fees contribute to insurance coverage in case of major security incidents.
Binance Simple Earn, replacing Binance Savings and Staking, operates like a traditional bank deposit. Users invest in cryptocurrency for a specified period, earning interest added to the principal. Management is through the Earn Binance wallet, offering two categories: flexible and fixed terms.
Flexible terms allow withdrawals at any time but have a fluctuating interest rate, changing every minute. This unpredictability in interest rates, ranging from 1.5% to 0.5%, is a notable drawback, prompting users to seek alternatives.
Fixed terms offer a fixed return rate but only permit withdrawals at predetermined times, typically for 30, 60, 90, or 120 days. Early withdrawals incur penalties.
While Binance has a strong reputation, its Simple Earn service faces challenges, particularly in low interest rates compared to competitors. Addressing these concerns is crucial for Binance to stay competitive in the market.
Nexo: Easy Passive Income for Crypto Holders
Nexo, founded in 2018, is a cryptocurrency platform with 5 million clients globally. While initially offering the Earn Interest Product, it had to withdraw from the USA due to regulatory considerations.
Similar to Binance Simple Earn, Nexo’s product provides fixed interest rates. For stablecoins, the highest annual rate is 11%, but can reach 16% if you opt for Nexo token returns and lock your assets for several months. Major cryptocurrencies offer rates of 7-8% with fixed terms and Nexo token payouts. Some less popular cryptos can yield up to 12-15% annual interest, but their higher volatility poses a risk of potential losses exceeding potential gains.
CoinDepo: When Crypto Interest Earnings Are the Priority
CoinDepo is another platform that offers passive crypto earnings. CoinDepo Compound Interest Accounts are attracting more and more users and there are a few reasons for that.
- Both Nexo and Binance require users to lock up their funds for a specific period (1 to 4 months) to receive higher fixed returns, but the options are limited. In contrast, with CoinDepo, you can receive interest payouts at a fixed rate on a daily, weekly, monthly, quarterly, semi-annual or annual basis.
- When you compare the returns you can receive from CoinDepo to those at Binance and Nexo, for instance, you will see that the latter rarely offers rates higher than 15% and even if it does, these are given for highly volatile and not-so-recognized cryptocurrencies. Accordingly, you would need to risk losing funds due to price fluctuations in hopes of better returns. Unlike other platforms, CoinDepo only supports major stablecoins and cryptocurrencies. Interest rates on stablecoins (USDT, USDC, DAI) start from 18% and go up to 24% per annum + compound interest, while on major crypto such as BTC, ETH, BNB, they range from 12% to 18% per annum + compound interest. In comparison, the highest rate offered for stablecoins on Binance is 12% per annum. There are three less popular cryptos on Binance that get a higher rate but you would need to lock your assets for 3-4 months.
- With CoinDepo, you will know exactly how much you will get regardless of the term. Nexo also has fixed rates, but they are much lower among other things. With Binance, you can get fixed rates only if you lock your assets for at least 1 month, otherwise, the interest rates can change literally any minute.
- All three platforms also have loan services, but on Binance and Nexo, users are required to provide collateral. In other words, the user freezes digital assets in a collateral account, in exchange for which they receive loan funds. CoinDepo does not require collateral and allows users to take out a loan while still earning interest profit on the funds in the Compound Interest Account(s). Moreover, the interest profits are typically larger than the fees you would pay for the loan, which means that you get assets (loan) that you can use however you desire and still earn interest.
It is not hard to come to the conclusion that CoinDepo is one step ahead of its competitors when it comes to earning passive income on your crypto and stablecoins. Binance and Nexo simply prioritize other services and offer earning opportunities for their existing users as a bonus when they have some assets lying around between transactions and other activities on these platforms.