Users of the Luno cryptocurrency exchange can now earn passive income on bitcoin holdings through the firm’s new “savings wallet.”
- Launched Monday, the product is said to bring bitcoin savers up to 4% in interest per year, with no fixed terms.
- Luno – which is owned by CoinDesk's parent company Digital Currency Group (DCG) – said users can withdraw their bitcoin from the savings wallet into their normal wallet at any time.
- Interest is calculated on the first of every month.
- The firm's CEO and co-founder, Marcus Swanepoel, said in an announcement the wallet was launched after a 95% of customers indicated they would like to earn interest on their holdings.
- The interest rate offered is "much higher" than those currently offered by traditional savings schemes in regions such as Europe, he added.
- The firm's research found 54% of respondents earned zero interest on their cash savings internationally.
- Luno was acquired by DCG in September, with the exchange to continue to operate independently as part of the blockchain investment company's group.
- The bitcoin savings product comes at a time when investors are increasingly turning to ways to earn income from their cryptocurrency holdings other than merely holding in the hope of gains.
- The area of decentralized finance, or DeFi, has soared over the last six months as the concept of "yield farming" saw wider appeal as a means to earn rewards by loaning liquidity.
- However, DeFi, with its sometimes unproven protocols and anonymous founders, also carries risk.
Also read: What Is Yield Farming? The Rocket Fuel of DeFi, Explained
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