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At Blockchain.com, we offer three types of reward products in which you may “earn” crypto.
- Passive Rewards
- Active Rewards
- Staking Rewards
Staked crypto-assets (like staked ETH) are digital coins that are locked away to help keep a digital network safe and, in return, you earn some rewards. It’s important to familiarize yourself with the risks associated with putting your crypto into rewards accounts.
1. Punishment Losses (Slashing risk)
- If you stake (lock in) your digital coins and something goes wrong (even if it’s not your fault), you might lose some of themas a penalty.
2. Can’t Touch This (Liquidity risk)
- When your digital coins are staked, you can’t use or sell them for a while, so you might miss out on other chances.
3. Surprise Yields (APY not guaranteed)
- The rewards you get from staking can change and aren’t promised, meaning you might get less than you think.
4. Changing Rules (Protocol risks)
- The rules for staking can change and bring new risks or unexpected situations.
5. Other Laws May Apply (Regulatory risks)
- The way staking works can look a lot like how an investment fund works. You and others put your money in and in due course you get your money back plus or minus any money from its performance when managed by the person you gave it to. Some staking products should really be regulated like funds, but often aren’t and the regulators may bring enforcement action, which could affect the performance of the staking.
Find out how each Rewards product works
How does Passive Rewards work?
The Passive Rewards Account is a crypto storage facility within your Wallet that earns rewards on the amount you transfer and store in it.
Any funds you transfer into the Passive Rewards Account will begin earning rewards at a compound rate. When you’re done storing your crypto in the Passive Rewards Account, you can withdraw it along with any rewards earned over that time to your Blockchain.com Account.
Withdrawals can be initiated at any time after the initial holding period (7 days) for any amount (the total amount available to be withdrawn will be displayed in the confirmation screen).
At this time, you can only withdraw funds to your Blockchain.com Account. After that, you will be able to send it to the DeFi Wallet if needed.
Withdrawals from your Passive Rewards Account to your Blockchain.com Account are not subject to any fees.
How does Active Rewards work?
Active Rewards provides a way for you to earn on your crypto in an otherwise down or flat market. Specifically, it lets you subscribe to a strategy to earn rewards if you believe the price of crypto assets won’t go up significantly in the next week.
Every week, a new Active Rewards strategy is made available to all Active Rewards customers that sets a trigger price for crypto assets that is higher than the current market price. If you believe the price will be under the trigger price at the end of the week, you can subscribe to the strategy and earn an annual rewards rate on your crypto, paid out weekly on Fridays at 8am UTC.
The trigger price and the rewards rate are set at the start of each weekly cycle and if you don’t withdraw your funds you’ll automatically be rolled into the strategy for the following week.
Since the specific trigger price changes each week, let’s take a look at some scenarios using the following values:
- Currency: BTC
- Duration: 1 Week
- Annual rate: 8%
- Current price: $20,383
- Trigger price: $22,000
Scenario 1 - Price of BTC is at or lower than the trigger price at the end of the week
If the price of BTC ends the week at or lower than the trigger price, you’ll receive your rewards for the week and your BTC will be returned to you valued at the market price.
So in the scenario depicted below, if you start the week by depositing 1 BTC in Active Rewards, you’d end the week with 1.00147705 which would then be re-subscribed to earn rewards for the following week.
Scenario 2 - Price of BTC is higher than the trigger price at the end of the week
If the price of BTC ends the week higher than the trigger price, you’ll still receive your rewards for the week but your BTC will be returned to you valued at the trigger price, resulting in a reduction in your BTC-denominated balance.
So in the scenario depicted below, you’d start the week with 1 BTC, at the end of the week you’d receive your 0.00147705 BTC reward, but because the price of BTC went over the trigger price your BTC balance would go down from 1 to 0.88147705 BTC. Thus, you’d have a balance of 0.88147705 BTC which would be re-subscribed to earn rewards for the following week.
How does Staking Rewards work?
We use the following formula to calculate daily staking rewards:
Daily Staking Rewards = (Principal + Accrued Staking Rewards so far) ((1+ annualized Staking Rewards rate)^(1/365)-1)
Let’s say you transfer 1 ETH into your Staking Rewards Account. On the first day, the Staking Rewards would be calculated as follows:
Daily Staking Rewards = (1 ETH + 0 ETH) ((1 + 0.04)^(1/365) - 1) = 0.00015965358 ETH
If you continue to hold the principal and the earned Staking Rewards in your Staking Rewards Account, the daily Staking Rewards will increase over time, because the previous Staking Rewards will be part of your balance when accruing future Staking Rewards.
Keep in mind that, due to blockchain conditions, the Staking Rewards rate may go up or down while your funds are in the account.
We will inform you of the current Staking Rewards rates via email on a monthly basis and you can always check the current rewards rates in the Earn tab of your Blockchain.com Wallet.