Staking is a way for cryptocurrency users to generate passive income as they earn interest on their investments. And now, to meet the demands of its customers, popular exchange Bitfinex has launched a staking rewards program, according to a Tuesday announcement.
The new staking services will allow Bitfinex’s users to earn interest of up to 10% per annum for depositing and holding their digital assets on the exchange.
For the time being, however, the staking program only features EOS, Cosmos (ATOM), and v.systems (VSYS). The exchange plans to add support for Tezos (XTZ) sometime in May.
Speaking about the development, Paolo Ardoino, Bitfinex’s Chief Technology Officer, said the exchange is committed to engaging their existing customers and the broader crypto community with innovative products and features.
“The Bitfinex Staking Rewards Program provides our users with another avenue to increase their holdings on our platform,” he added.
Staked tokens will remain under the control of the exchange and will be secured like other cryptocurrencies on the platform. The company assures users that funds will be safely stored on the platform through the use of its secure in-house custody solution, so customers do not need to worry.
To celebrate the launch, the exchange is hosting a competition that allows participants to win a branded Bitfinex t-shirt.
Bitfinex is not the first cryptocurrency exchange to launch a staking rewards program. The likes of Kraken, Coinbase, and leading exchange Binance, have launched similar staking services offering users between 5 and 7% returns per annum.
While crypto staking seems attractive, it also comes with some risks. It is generally not advisable for users to store large amounts of cryptocurrencies on exchanges unless they are trading with the funds. An exchange is only secured until it is hacked.
Hackers are the nightmares of cryptocurrency exchanges. These nefarious players are always targetting exchanges, and one can never tell which trading platform will be the next victim. They have been several reports of exchanges like Mt Gox and Cryptopia that went bankrupt after suffering severe security breaches, which led to the loss of users’ funds.