Cryptocurrency holders and hodlers can earn passive income on Coinbase by staking altcoins for interest-based financial rewards
Over the last few years, staking and earning rewards on crypto held in wallets and exchanges has become a popular way of earning passive income. Staking crypto lets users earn crypto by contributing to the Proof of Stake (POS) network of a digital asset.
Originally, staking was only available on exchanges, but more and more desktop, mobile apps, and private wallets allow for staking which we will cover in future articles.
Staking and Earning Rewards on Coinbase
For this article, we are going to look at staking and earning rewards on Coinbase. This article assumes that you have already set up your Coinbase account and gone through KYC verification. To get started staking on Coinbase, make sure you have the option enabled. Go to “Settings” and enable the option to stake and earn rewards under the “Financial Services” tab.
Next to each asset in the “Financial Services” section, the description will tell you whether the asset is earning staking rewards or another type of reward. For example, Tezos (XTZ) and Cosmos (ATOM) earn staking rewards, whereas USD Coin (USDC), DAI Stablecoin (DAI), and Algorand (ALGO) are not staking rewards but payout rewards just the same.
Go to your portfolio, and on the right side of the screen, you will see all of the current rewards offered on Coinbase. Your options to earn rewards are USD Coin (USDC), DAI Stablecoin (DAI), Tezos (XTZ), Algorand (ALGO), and Cosmos (ATOM). Each digital asset has its minimum required to begin earning rewards.
What is APY?
Annual percentage yield (APY) is the interest rate based on a compounding period of one year. On Coinbase, USDC earns 0.15% APY, DAI earns 2.00% APY, XTZ earns 4.63% APY, ALGO earns 6.00% APY, and ATOM earns 5.00% APY.
Related: Yield Farming vs Staking
So let’s say we are looking to earn Algorand (ALGO) rewards; ALGO has a potential reward of 6.00% APY and does not show a minimum required to earn. Next, we can either purchase ALGO outright from Coinbase or convert another asset to ALGO; for this article, we will convert Ethereum (ETH) to Algorand (ALGO).
Go back to your portfolio and on the right side of the screen, under the rewards dropdown, you’ll see that the Lifetime rewards counter has begun, expand the dropdown, and Algorand (ALGO) is showing earnings of 6.00% APY.
Next to each of the rewards, the question mark icon will provide you with more information about the specific reward: Lifetime rewards, Rewards received, Rewards pending, and Annual Percentage Yield (APY).
Earning rewards and staking generally require that the digital asset be held in a wallet and not used, sold, or moved. The asset accruing rewards remain in your wallet and when you are ready to spend or trade the asset, do so.
You are not required to stake any particular asset on Coinbase and put as much into one or spread out your assets are you see fit, keeping in mind that the only assets that receive rewards are those enabled on your account.
For more on how to earn crypto on Coinbase, see How to Use Coinbase Earn