Today in this post, we will be looking at how to earn a stable income with crypto through staking. This method is still quite new and so you’d have to read thoroughly to be able to get all the important information about staking being passed here. Without any further ado let get on with the post.
First, what is staking?
Staking is a wide term used to denote the act of consenting your crypto-assets to a cryptocurrency protocol. You get to earn rewards in exchange for consenting your assets. One of the easiest ways to make money right? There’s more actually. With staking you can engage in securing the network by locking up tokens. Thereafter, you will be rewarded for securing the network in the form of native tokens.
Your reward simply gets as high as the crypto-asset to which you consent. The rewards are distributed on-chain. However it’s worth noting that if funds are on an exchange, the exchange itself will manage the staking of funds on-chain on behalf of the user . That is the process of earning is totally automatic. You are sure of getting paid. Staking is all you have to do. In other words, your crypto assets will earn you money while you sleep.
How does staking work
For instance, if you leave your coins in the staking wallet for 3 months, 20% interest will likely be earned. Your earnings simply increase by the month. And so by 6 months it certainly would have increased by 50% and at 12 months, you’d have 100%.
Taking a vivid look at things, these staking wallets validate transactions to know if truly you are the owner of the coin before transfer. The network performs these actions which then rewards you in your staking wallet. The wallet simply maintains the security of the network.
It is quite similar to depositing your money into a fixed account and being guaranteed a specific amount of interest in days, weeks, or months.
Pros and Cons of staking
What is the essence of staking if there are no tangible advantages to it, right? Alright, now we will take a look at the pros of staking on an exchange. What are the positives that come along with staking your crypto assets? Let’s get right on it.
There are a lot of advantages to staking cryptocurrencies.
• Easy setup
Setting up a staking wallet is easy as the exchange will do it for you. Just deposit the coin or the token, navigate to the staking menu, set up fews parameters and start earning right away.
• Well secured
The system is well secured because exchanges spend a lot on security every year, which is one of their priorities. This means there is little chance of the network being attacked. Your assets and transactions are safe and secured.
• Guaranteed amount of earnings
Another advantage is that you are guaranteed a certain amount of earnings. The source of income can be predicted by the increase in the value of a coin. This way to be sure of always earning from your state.
Con of staking
Of course, there are bound to be some disadvantages of staking your crypto assets. So what exactly are the disadvantages of staking your crypto assets? Let’s check them out below:
• Inability to sell during staking period
Now for the downside to staking. A major downside to staking is that you cannot sell your coins during the staking period. You basically lock them away for a while.
• Possible losses
This is great news if the coin goes up but if the opposite occurs, could result in losses. Especially during a bear market. Though every market has the potential of losses with staking, it becomes quite high.
Best Places for Staking
Cryptocurrency staking or stake simply involves consenting to some of your crypto assets and receiving a regular reward for your stake. This has been an investment alternative after the boom of DeFi platforms. Besides helping in the process of validating the blocks of the currencies that work in proof-of-stake. Here are the best places for staking your crypto assets:
- – FTX
- – Binance
- – Crypto.com
Conclusion
If you have been looking for an extra way to earn with your crypto assets, then staking is one of the best options you’d want to try out. It is very easy and effective. In no time you’d start earning from staking your crypto assets.
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Written by: Narender Charan
