Cryptocurrency staking isn’t for everyone.
Crypto staking through platforms such as eToro is mostly aimed at the buy-and-hold investors (known as ‘hodlers‘ in the crypto world ) who are unfazed by the risks of cryptocurrency and their frequent price fluctuations. These investors view staking as a part of their long-term accumulation strategy that allows them to grow their crypto investment over time.
If that describes your investment style then keep reading because this guide provides a complete breakdown of everything you need to know about staking on eToro.
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In Q4 2020, popular trading platform eToro launched a dedicated staking service, allowing its users to earn staking rewards on Cardano (ADA) and TRON (TRX) assets.
Its founder and CEO explained:
“Staking is an important development in the crypto market but it’s difficult for people to access its benefits on a secure platform, which is what we’re enabling our global community of investors to do by offering this new service.”eToro founder and CEO Yoni Assia
“Clients staking on eToro benefit from doing so on a regulated and globally trusted platform. We also believe staking rewards on our platforms are among the most generous in the market, from a minimum of 75% of the staking yield.”
eToro Staking Assets: Cardano (ADA) and Tron (TRX)
Users are eligible for staking rewards on Cardano (ADA) and TRON (TRX) assets only for the time being.
eToro plans to make other crypto assets available for staking soon, including NEO, Tezos, EOS, and ETH 2.0 and much more!
How does eToro Staking Work?
To participate in Cardano (ADA) or Tron (TRX) staking, users simply need to hold the cryptocurrency asset on the eToro platform.
⚠️ eToro does not pay out staking rewards on Cardano (ADA) and Tron (TRX) assets held in CFD accounts, copy trading, copy portfolios or short positions. This may change in future.
The reward payout is automated, which requires no action from the users. eToro executes the entire staking procedure on behalf of the user, simplifying the whole staking process whilst also protecting assets against exposure to any additional risks and handling all the necessary procedures behind the scenes.
The staking process can be complex for certain cryptocurrencies. For instance, Cardano (ADA) does not permit solo staking – so anyone who wants to stake Cardano (ADA) could either run a staking pool that other users can join, or delegate their holdings to someone else’s pool. This ensures there are sufficient node operators within the network. However, eToro facilitates the entire process for its users.
⚠️ With the exception of CFD trading, all crypto assets bought and/or staked through the eToro platform belong to the user and (not to eToro).
To become eligible for receiving the staking reward a user must hold the staked crypto asset for a certain period of time.
The time period for when a user becomes eligible depends on the blockchain of the specific crypto asset. For instance, for Cardano (ADA), the position must have been open for at least nine days, with users becoming eligible from day ten. For Tron (TRX), the position must have been open for at least seven days, with users becoming eligible from day eight.
Eligible eToro users receive the staking rewards that they have earned each month directly and automatically, with absolutely no action required on their part.
The rewards are calculated based on daily snapshots taken at 00:00 GMT. The system calculates the corresponding reward to be distributed at the end of the month based on an average daily position size.
Each user also receives an individual monthly email, explaining how much in staking rewards they received that month, and how it was calculated for each of the supported staked crypto assets.
Staking rewards on eToro are compounded monthly.
Cardano (ADA) and Tron (TRX) Staking Yield on eToro
Discussions on the eToro social platform seem to suggest the staking yield or Annual Percentage Rate (‘APR’) that eToro users receive in the form of staking rewards for holding Cardano (ADA) or Tron (TRX) crypto assets is 5%.
However, we were not able to formally verify this figure and it could be much higher.
CoinMarketExpert has compiled an up to date table identifying the best staking coins and their annualised rewards. There you will see that the average staking yield obtained from various platforms is between 5%-6% for Cardano (ADA) and roughly 8% for Tron (TRX).
eToro Staking Fees
The website indicates that Bronze members get to keep 75% of the staking yield while Silver, Gold and Platinum Club members retain 85%. Diamond and Platinum + Club members get to keep 90% of the staking rewards.
An implied charge of 10% – 25% of the staking yield is a little bit on the high side in our opinion especially after adding the spread that is charged for purchasing crypto assets. However, to be fair eToro does do a lot of work behind the scenes to facilitate the staking service. eToro spends a lot on operational, technical, and legal costs to provide value-adding tools and services that aim to improve trading and investment decisions as well as to ensure the crypto assets that are held by their users are safe and secure.
Why is staking on eToro an attractive proposition?
Now that we have thoroughly explained the staking service, we would like to mention why eToro offers an attractive proposition.
1. Safety first
eToro provides account holders with FREE Insurance of up to 1 million Euro/GBP/AUD. Whilst, crypto accounts are not covered by this policy, eToro is a liquid company that is high on compliance, security and safety and that is trusted by millions of traders and investors worldwide.
On its website, eToro explains that cash, CFD and security accounts are covered by an insurance policy from Lloyd’s of London for the benefit of its clients’.
The insurance covers claims of Eligible Clients (of eToro (Europe) Ltd., eToro (UK) Ltd. and eToro AUS Capital Pty Ltd.) suffering losses in the unlikely event of eToro’s insolvency and in case of Event of Misconduct (as defined in the applicable Policy).eToro
The insurance covers (i) up to 1 million Euro, GBP or AUD (depending on the regulated entity), (ii) up to the aggregate limit purchased by eToro; and (iii) subject to an excess amount (as defined per applicable policy). The insurance covers cash, all CFD positions, and securities. Note that crypto-assets trading (non-CFD) is not covered by this insurance, as set in the applicable Policy
2. A globally recognised brand
eToro is one of the most popular multi-asset trading platforms in the world serving over 20 million users worldwide. eToro is also in the process of going public on the Nasdaq stock exchange via a reverse merger that is expected to be concluded sometime in Q3 of 2021. This adds will add an extra layer of governance that contributes to trust and credibility.
3. A multi-asset platform that is intuitive and competitively priced (with 0% commissions on stocks)!
We like eToro because they do not only cater to day traders but also to investors of all levels who require modern tools to build a diversified portfolio. eToro provides access to over 2,000 different financial assets, including stocks, cryptocurrencies, ETFs, indices, currencies and commodities.
We also like the fact that eToro provides a practice account that allows beginners to trade various assets risk-free with $100,000 in a virtual portfolio.
Stock and ETF investing
0% commissions apply on stock or ETF investing (when opening a long unleveraged position.) There are no spreads or no hidden charges, and you actually gain rights to the underlying assets. A low withdrawal fee of $5 does apply nonetheless as well as foreign exchange rates to non-USD deposits and withdrawals, which is in the greater scheme of things fair and normal.
Cryptocurrencies, forex, indices and commodities
We have reviewed the spreads of crypto and other asset classes and they are competitive. Spreads on crypto are as low as 0.75% whilst on leading forex pairs they are as low as 1 pip!
On its website, eToro states that when buying cryptocurrencies, you gain ownership of the assets. However, when looking closer at the terms and conditions it indicates that this is not applicable to Australian traders and investors. On its website, eToro explains that “all trades performed by clients under the Australian Securities and Investments Commission (ASIC), are executed as CFDs, with no ownership of the underlying assets.”
4. Access to interesting insights and copy-trading functionality
eToro is a pioneer in social and copy trading!
When you join the platform you gain access to a community of 10 million + experienced traders and investors across 140 + countries. Here you can check their track records and whether they were capable of outperforming market benchmarks. You will also gain access to social features that allow traders and investors to interact, share ideas, insights and trading strategies as well as make new friends and trade with the crowd.
eToro is a multi-asset platform that offers both investing in stocks and crypto assets, as well as trading CFDs.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Past performance is not an indication of future results.
Cryptoassets are volatile instruments that can fluctuate widely in a very short timeframe and therefore are not appropriate for all investors. Other than via CFDs, trading crypto assets is unregulated and therefore is not supervised by any EU regulatory framework.
eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro.