Staking is a fantastic and simple way to earn cryptocurrency. This method of earning cryptocurrency is arguably the most passive. When compared to other methods of earning like trading or mining, there are very minimal fees and upkeep costs. The knowledge requirement to enter staking is not as extensive as its closest comparable avenue, mining. This allows practically anyone that owns a device with internet access to stake cryptocurrency.
Staking cryptocurrency provides power to proof-of-stake blockchains which enables them to operate. When a user stakes their tokens they receive a reward for participating in the network. If a person does not have enough of the token to operate a node, they can participate in a stake pool to earn rewards with others by pooling their funds. The rewards are often paid in the token that was staked (although this is not always the case). Different cryptocurrencies will pay out different yields, and different pools will pay out different rates as well.
For the purpose of relativity in this article we will take a look at staking CRO on the crypto.com DeFi wallet. (This is not a solicitation to stake CRO or any cryptocurrency asset on their platform. Please decide which coin YOU want to stake and where you would like to stake it prior to staking.)
If you are interested in staking cryptocurrency, you will first have to decide which coin you want to stake. There are so many coins to choose from that this may seem like a difficult task. Don’t worry and don’t rush. Take the time to read through a coin’s white papers to see what problem they are solving or what they are trying to achieve. If you believe their solution to a problem is significant or you believe in their mission statement only then should you consider the coin a candidate for staking. If you don’t think the coin will be sustainable or worth a long term investment then perhaps you may not want to stake there.
After you decide which coin you want to stake, you need to obtain some of that coin of course. Once you have the coins either from an exchange or third party seller you must choose where to stake them. You can determine this by looking into validators and/or protocols to review yield percentages, fees, and voting power/uptime. Perhaps the exchange you purchased the coins from has a staking rewards program, or maybe you will be transferring the tokens to an external wallet to stake. If you are transferring to an external wallet, depending on the token you have chosen there may be a fee and you should consider this in your calculations before withdrawing a coin to stake it.
After you choose where to stake your coins, that’s it! You are earning cryptocurrency passively with staking. You can take the returns and delegate them back to your stake pool to increase the amount of stake you are earning on, which is a marvelous way to build a passive income portfolio. You can also take the returns and explore other avenues of earning with crypto.
The steps to stake cryptocurrency are generally the same or similar – the differences lie in the fees, rewards, and the coin projects themselves. There may be a fee with some pool to stake your crypto with them. Some pools or nodes may charge a higher fee than others, but also may offer various returns. Most considerably, a coin may not be worth the investment depending on the time projection. Example: if you are earning a coin reward of +6% monthly, but the coin has gone down -20% over two months, you would be at a -8% loss in USD value (or your native currency). You would have earned more of the token staked over those two months, however since the price of the token is down you might have made more money by trading or some other means.
Staking is just one of the many ways to earn with cryptocurrency. It provides access to investors of all sizes with very little requirements. For many, staking is the gateway to crypto earning. You can visit our website to explore other crypto opportunities and expand your earning avenues.
By viewing any material or using the information within this publication you understand that this is general education material and you can not hold any person or entity responsible for loss or damages resulting from the content or general advice provided here. Trading cryptocurrency has potential rewards, but also potential risks. You must be aware of the risks and be willing to accept them in order to invest in the markets. Only trade with funds you can afford to lose. This publication is neither a solicitation nor an offer to buy/sell cryptocurrency or other financial assets. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed in any material on this website. The past performance of any trading system or methodology is not necessarily indicative of future results.
Written by Edward Gonzales © Crypto University 2022