Let’s take a look at best way to stake Ethereum, as that is currently one of the most popular crypto currencies. Historically people who have purchased Ethereum (ETH) have had good chances at increasing their fortune. Ethereum is not special in that sense. Trading cryptos have increased in popularity over the years and the increased demand has pushed the prices up.
If you own the cryptocurrency Ethereum you can increase you fortune in another way than just holding and waiting for the prices to you up – and it doesn’t even require a lot of technical knowledge. With Ethereum staking you can either place your ether on a validator node directly on the Ethereum network’s blockchain, in a staking pool, or soft stake your coins on a trading platform that offer these services, which all give you a passive income. We advise that you read this article first, if you are not familiar with the terms staking and soft staking.
One of the exchange platforms that offers soft staking for it’s users, is Crypto.com (CDC). In this article we will explain which of the many options that gives the highest return.
So read on and find the best way to stake Ethereum on crypto.com.
Earn options on Crypto.com
You need to use the native App to enter your Ethereum into the Earn program.
Crypto.com currently has three different Apps. Only the first App is relevant for this article.
Crypto.com offers three different terms for entering the Earn program with your ETH. The first option is on flexible terms. You can withdraw your ETH again at any time with the flexible terms. The downside is that it gives the lowest interest rate. The second option is locking your ETH for 1 month. You will not be able to withdraw your coins within that month, but the interest rate is a bit higher. The final option is locking yourETH for 3 months, which gives less flexibility but the highest interest rate.
Your rewards for lending out your digital assets are paid out once a week no matter which option you choose. So to find the best way to stake Ethereum, we need to take a closer look at interest rates (APY) and payment terms at the various staking tiers.
Your interest rate at Crypto.com (CDC) depends on, which type of customer you are. Crypto.com (CDC) categorizes their customers into three different tiers. The higher the tier you are placed in the better rates they are giving you. Your tier depends on how many Crypto.com Coins (CRO) you have staked with them. As you become a customer you can purchase CRO and stake it. You are placed in Tier 3 If you choose to stake an amount of CRO equivalent to 400$ or lower. You are placed in Tier 2 if you choose an amount of CRO equivalent to 4,000$. You are placed in Tier 1 if you choose an amount of CRO equivalent to 40,000$ or more.
You can see the staking tiers and calculate rewards on Crypto.com´s website.
Highest compound staking rewards might not be the best for you
You will receive your staking rewards weekly as explained above. The rewards are not automatically restaked. Instead, the rewards are put in your wallet and free to use immediately. You want to restake these rewards as quickly as possible to maximize profit. Earning interest on your rewards is called compound interest and it can make a significant difference to total reward you end up with. You can read more about compound interest on Investopedia.
The terms where you lock your Ethereum for 3 months gives the highest total reward. Crypto.com requires a minimum amount of 0.15 ETH for you to participate in the Earn program. So, unless you are in the Earn program with massive amounts of ETH, you will have wait until the 3 months are up. By then you can add your gained rewards to your initial principal and reenter the Earn program with everything. You can restake your rewards four times per year with this method.
The two other terms let you restake your rewards more often. With flexible terms you can restake every week when you receive rewards, which is 52 times per year. With the 1 month locked you can restake 12 times per year. Both options allow for more compound periods, which is great, but it cannot compete with the higher interest rate that locking 3 months gives. Compound interests build speed over time, and it is reasonable to believe that the higher amount of compound periods will eventually beat the higher interest rate if the investment period is long enough. That is not true in this case.
Staking tiers – the best option might not be so obvious
You can find the different Earn tiers with their APY and terms for Ethereum (ETH) compared below. The examples use a three-year investment period.
Final remarks on the best way to stake Ethereum on Crypto.com
You get the highest interest rate by locking your Ethereum funds for three months as explained above. It was worth noticing that locking your Ethereum for a longer period also introduces a bigger risk. You will not be able to sell if the price of Ethereum skyrockets within the lockup period and you want to capitalize. For day traders doing flexible terms might be a better option for that reason. Also worth noticing is that you can stake Ethereum on a lot of other platforms with staking services, like Kraken, Coinbase, Binance and Gemini. On Crypto.com the rewards are paid out in Ethereum. Other crypto exchanges might pay out in ETH2.S or only after the Ethereum 2.0 network upgrade is complete. ETH2.S is a token that represents ownership of a staked Ethereum that can be claimed when the network upgrade is complete. So, maybe it’s time to dust off that hardware wallet and see if you can put your cryptocurrencies to good use on the blockchain and help power the proof-of-stake model meanwhile.
Here are some related articles:
- What is staking and soft staking?
- Staking Cardano (ADA)
- How to stake Polkadot (DOT) for highest rewards?
- Bitcoin lending for the highest rewards