The Indian crypto community now has the opportunity to earn passive income merely by holding cryptocurrencies – an activity known as staking.
Mumbai-based cryptocurrency exchange CoinDCX launched its new product on Friday, allowing its users to stake three cryptocurrencies: harmony (ONE), qtum (QTUM) and tron (TRX).
Users with a minimum balance of 100 ONE tokens, one QTUM token and five TRON tokens will be eligible for staking.
An alternative to proof-of-work, or mining, proof-of-stake is a system used by some blockchains enabling users to hold coins in a cryptocurrency wallet to support the operations of the network in return for newly minted coins.
In effect, staking is similar to buying government bonds in return for a fixed yield.
CoinDCX said it will pool the holdings of multiple customers as a way to increase their chances of receiving rewards.
“We want to make staking very simple for our users,” said Neeraj Khandelwal, co-founder of CoinDCX.
The exchange will aggregate staking rewards via partner exchanges such as Binance, and also stake natively on blockchains, according to the announcement.
CoinDCX is the first firm to launch a staking product within India, according to Khandelwal.
Mumbai-based WazirX exchange’s founder and CEO, Nischal Shetty, told CoinDesk in a Telegram chat his team is planning to launch a staking offering later this month for platforms like Tron and EOS.
Sumit Gupta, CEO of CoinDCX, told CoinDesk the lure of making additional earnings via staking would be a big boost for the Indian market and could drive cryptocurrency adoption in the country.
WazirX’s Shetty agreed, saying, with interest on bank savings interest relatively low, Indian citizens are seeking other ways of earning passive income.
The Reserve Bank of India (RBI) reduced the benchmark interest rate to a record low of 4% early this year.
The annual returns from staking ONE, QTUM and TRX at CoinDCX are 8%–10%, 6%–10%, and 5%–10% respectively, the exchange said.
Exchanges have witnessed a steady rise in trading volumes ever since the Supreme Court overruled the Reserve Bank of India’s ban on banking services for cryptocurrency firms in March.