As blockchain technology becomes increasingly prevalent in everyday digital finance, using decentralized protocols to earn crypto is now available to anyone, not just the tech-savvy. Whether you earned crypto by staking, yield farming, selling NFTs, or earning from a Web3 game, one question prevails: How do you withdraw on-chain earnings, safely and thoughtfully?
What does it mean to withdraw on-chain earnings?
Withdrawing your on-chain earnings means moving your cryptocurrency income from a decentralized protocol or smart contract to a personally-owned cryptocurrency wallet limited in some cases to a centralized exchange. These funds will either be in a smart contract, or in a wallet on-chain within a dApp, and you will need to interact with the blockchain to withdraw it from there.
For instance, if you earned staking rewards from securing crypto using a DeFi protocol like Lido, you will manually need to withdraw your on-chain earnings to take ownership of your funds. Or, if you earned tokens while gaming from a play-to-earn game, you will also need to withdraw your tokens from its dApp to benefit from your earnings.
How Do I Withdraw My On-Chain Earnings?
The withdrawal process can differ in structure by platform, but the workflow is typically consistent:
- Connect Your Wallet - Use a reputable wallet like MetaMask, Trust Wallet, or a hardware wallet.
- Go to the Earnings or Rewards Tab - Go to the dApp's dashboard with your earnings displayed.
- Hit "Claim" or "Withdraw" - you will start the blockchain transaction.
- Approve the Transaction in your Wallet - Review gas fees, check the network, then approve the transaction.
- Once you approve the transaction, your earnings will show up in your wallet typically in minutes based on the network.
Are There Fees?
Yes. Since your withdrawal is on-chain, there will be a gas fee which is the fee to have the blockchain process your transaction. The fee will depend on the network (i.e. Ethereum is historically the more expensive), the level of network congestion and complexity of the smart contract being executed.
Pro tip: Always have a small amount of the native token of the blockchain (ETH, BNB, MATIC, etc.) in your wallet to facilitate payment of fees.
Is it Safe to Withdraw On-Chain Earnings?
- Overall, it is considered safe as long as you practice safety awareness. You should always:
- Utilize official links and steer clear of any phishing site.
- Verify the wallet you're sending funds to.
- Never disclose your private keys or seed phrases with anyone.
- Do not trust fake support sites or social media accounts offering help.
Because blockchain is decentralized, there are no customer service hotlines to fix an error. If a transaction is sent, it cannot be cancelled.
Conclusion
Knowing how to withdraw on-chain earnings is an essential milestone for anyone earning crypto from DeFi, NFT, and Web3 platforms. The process may seem intimidating at first, but if you take a few precautions such as verifying addresses and understanding gas fees, the process will be fairly seamless and safer. As the Web3 space grows, so will the tools and platforms to help users interact with their on-chain earnings. Until then, educate yourself, verify everything, and do not rush. Caution approaches are always your best friend in crypto.
