Binance, the world’s largest cryptocurrency exchange by trading volume, is launching a new service that will allow users to earn staking rewards on their crypto holdings.
The new service, called “Binance Earn,” will initially offer two staking products: one for the popular Tezos (XTZ) cryptocurrency and one for the Binance-native token Binance Coin (BNB). Binance said that more staking products will be added in the future.
To participate in Binance Earn, users must first deposit their crypto assets into a special “Binance Earn wallet.” Once deposited, users can then choose to stake their assets for a set period of time and earn rewards based on the size of their stake and the length of time they locked up their funds.
For example, Binance is offering up to 10% annualized rewards for users who stake XTZ for six months, and up to 8% annualized rewards for those who stake BNB for two months.
At the end of the staking period, users can either withdraw their principal plus earned interest, or they can reinvest their funds back into Binance Earn to continue earning staking rewards.
It is important to note that Binance Earn is distinct from Binance’s existing “Binance Savings” service, which also offers interest-bearing accounts but requires users to lock up their funds for a set period of time. With Binance Earn, users have the flexibility to withdraw their funds at any time, though they will forfeit any interest that has accrued if they do so before the end of the chosen staking period.
The launch of Binance Earn comes as more and more crypto exchanges are looking to offer staking services to their users. Staking is a process whereby holders of certain proof-of-stake (PoS) cryptocurrencies can earn interest on their holdings by committing them to help secure the network.
Notably, Coinbase – the largest U.S.-based cryptocurrency exchange – recently launched its own staking service for select PoS cryptocurrencies. And earlier this year, Kraken – another major U.
S.-based exchange – acquired Circle’s Poloniex exchange in part so that it could offer staking services to Poloniex users.
It is clear that exchanges see staking as a way to attract and retain customers, as well as generate additional revenue. For crypto holders, staking can be a way to earn passive income on their holdings without having to sell them.
And because many exchanges offer staking services through custodial wallets, it can also be a convenient way to earn rewards without having to run your own node or worry about securing your private keys.
So is Binance Earn worth considering? For most crypto holders, the answer is probably yes. The interest rates on offer are competitive with other exchanges, and the fact that you can withdraw your funds at any time makes it a relatively low-risk way to earn passive income on your crypto holdings.