All crypto-earning CEFI products require users to “stake” their digital assets in order to earn interest. Staking is the equivalent of depositing, it comes in two forms Soft Staking and Hard Staking, each with different strings attached weighed up against associated benefits.
Soft Staking – Funds can be withdrawn at any time, with compounding interest paid daily in the asset staked or a token specific to the provider. You can generally switch between the two options at any time.
Hard Staking – Funds are locked for a set period, with the interest rate proportionate to the timeframe. The longer you stake, the more interest you’ll earn on your initial investment. Interest is compounded and paid daily in the asset or a token specific to the provider, which can be withdrawn.
Hard Staking often gives preferential access to other services, such as discounted purchase of crypto, reduced trading fees or access to a pre-paid card with cash-back on purchases in crypto.
Hard Staking providers are essentially exploiting an arbitrage between the returns available from staking directly with a Proof of Stake cryptocurrency that need validators, and the rate they offer their customers.
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