Binance, the world’s leading cryptocurrency exchange, announced the launch of its staking platform allowing its users to earn their staking rewards simply by depositing their funds on the exchange.
Staking is an essential part of maintaining proof-of-stake (PoS) networks and grants stakers rewards based on their contribution to network stability and security. Some PoS networks even use the staking mechanism for on-chain governance.
Staking on Binance Made Easy
Binance, as one of the exchanges with the deepest liquidity pools for cryptocurrencies, now allows users to earn rewards for simply depositing and holding assets on the exchange. The staking platform will guarantee a fair distribution of rewards by taking hourly snapshots for user balances on the respective staking blockchains.
Binance is making it very easy for users to stake, with no additional input from users and no minimum staking amounts. Rewards will be distributed at the end of the month, according to CEO Changpeng Zhao.
Right from the start, the staking platform will support eight cryptocurrencies: NEO (NEO/GAS), Ontology (ONT/ONG), Vechain (VET/VTHO), Stellar (XLM), Komodo (KMD), Algorand (ALGO), Qtum (QTUM), & Stratis (STRAT).
While Binance already had a system in place that distributed rewards for some assets like NEO, ONT, and VET, one inclusion that catches the eye is ALGO, which was recently launched and listed on multiple exchanges.
On the Binance staking platform, ALGO holders will earn an estimated 12%-14% annual yield. However ever since launching, Algorand’s token price has been in a down-trend falling more than 80%.
Exchanges to Squeeze out Staking Businesses?
While the staking platform from Binance is an adapted model of the staking-as-a-service business, it still is a direct competitor.
With cryptocurrency exchanges providing all-round services for cryptocurrency earnings, businesses that rely solely on the staking-as-a-service model might find themselves in a difficult position, as users gravitate towards the comprehensive offering of exchanges.
Earlier this year, Coinbase was one of the high profile exchanges that also added the staking feature to its Custody product, wherein institutional clients are able to stake their Tezos (XTZ) assets. As one of the top PoS cryptocurrencies, Tezos staking should be available on Binance relatively soon, as hinted by CEO Changpeng Zhao.
While its staking service is only rolling out, Binance already allows its users to earn interest on their cryptocurrencies through Binance Lending. Initially, users can lend BNB, ETC, and USDT, but the exchange plans to scale up and will add lending support for more assets in the future, and have already added privacy coins as BeInCrypto has previously reported.
What do you think of staking on exchanges? Is it a more convenient option that will convince stakers to move assets on an exchange? Let us know in the comments!