Trading in crypto, in its simplest form, involves buying a crypto low and selling it high. But what if the user doesn’t want to sell the crypto yet? Can one earn a passive income from their crypto holdings? With CoinSwitch EARN, you can! CoinSwitch EARN enables crypto holders to get rewards on their holdings by locking them for validation on the blockchain.
How to use EARN:
- Click on the EARN widget on CoinSwitch app
- Select the crypto to get passive income on
- Enter the amount to be locked-in
- Select the validator from the drop-down menu
- Confirm the order
- Track the rewards in the EARN ➡️ Manage section
Users can cancel the EARN order and unlock their crypto any time.
EARN is currently available only to Android users.
How is CoinSwitch EARN different from the market?
CoinSwitch EARN is blockchain governed and blockchain rewarded. On EARN, users lock-in their crypto for validation, and are rewarded in crypto directly by the blockchain. CoinSwitch does not lend or loan out users’ crypto to a third-party. This is to say, unlike many other market offerings, CoinSwitch EARN does not expose its users to counterparty risks found in lending and hypothecation programs.
On CoinSwitch, users will only be offered the EARN feature for crypto assets of blockchains that follow Proof-of-Stake (PoS) consensus. Crypto assets such as Bitcoin that follow Proof-of-Work consensus are excluded.
How does PoS blockchain work?
PoS is a consensus mechanism where validators are chosen to create new blocks and validate transactions based on the amount of crypto they hold. Validators are selected randomly, and their likelihood of selection increases with the amount of the crypto they lock-in. The process secures the blockchain network by incentivizing validators to act honestly and maintain the integrity of the chain. In return, the blockchain rewards the validators with crypto.
While anyone can be a validator of a public blockchain, it requires a certain degree of technical know-how, computing resources, and capital in the form of a minimum threshold. With CoinSwitch EARN, however, even retail users can take part in this process and get rewarded—users can simply lock-in their crypto through a validator. Users are rewarded from the total reward pool the blockchain assigns to the validator. The rewards vary for each crypto and validator. At any time, the user can cancel the order and unlock their crypto.
On CoinSwitch, users can choose from two validators: Blockdaemon and Figment. These validators have been chosen after analyzing their track record, uptime, on-chain performance, and more. Key statistics of the validators like annual reward percentage and uptime are readily available on the app for users to make the right decision. Annual reward rate refers to the percentage of rewards that users will get annually on their locked-in crypto.