What is Crypto Staking?
Crypto staking refers to the process of lending coins out to a Proof-of-Stake (PoS) network to validate crypto transactions. A PoS network keeps the blockchain secure to prevent external attacks, maintaining the integrity of cryptocurrencies.
Any individual who has a minimum required balance of a specific crypto asset can help to validate transactions and earn staking rewards. As such, crypto staking is known to be one of the most common ways users can further monetize their crypto holdings as it does not require much work.
When it comes to staking coins, all you would need to do is lock them in a cryptocurrency wallet. From there, the PoS network uses them to validate transactions. This means you won’t actually be spending them and instead, are locked up. This enables the network to maintain security and integrity when it comes to verifying transactions.
Since crypto staking would require individuals to lend out their coins to the network, they would in turn get rewarded by it. The underlying process here is simple: The more you stake, the greater your ability to validate transactions and thus, earn more tokens.
Other Benefits of Crypto Staking
Earning passive income isn’t the only benefit of crypto staking.
For one, crypto staking is said to allow for a more secure crypto network while being more energy-efficient as compared to mining. Plus, staking does not require users to purchase any expensive equipment. This means that any individual who already has invested in crypto can participate in crypto staking at very low entry barriers.
Lastly, staking is also beneficial to the crypto exchange or the blockchain network on which the staking occurs. This is because it makes it possible for the PoS network to consistently run and ensure optimum security and safety.
How to Stake Cryptocurrencies
If you’re looking to begin staking your cryptocurrencies, you would need to first identify which method of staking is best suitable for you. There are various ways to do so and two of the more common ones include staking on an exchange and staking on a SaaS platform.
Staking on an Exchange
One of the easiest ways to stake crypto is by doing it on an exchange. Since there are multiple exchanges in the market, you can easily decide which is best suited for you and that offers staking options.
Coinbase
The leading crypto exchange platform allows you to stake popular cryptocurrencies such as Algorand (ALGO), Tezos (XTZ), and Cosmos (ATOM). Even though the rewards aren't as high as on other exchanges, Coinbase is known to be an ideal option for those new to crypto staking thanks to its beginner-friendly user interface.
Kraken
Kraken is another popular exchange that enables you to stake your digital assets. The platform reportedly has more than $1 billion worth of coins staked and is a suitable option for those who are already familiar with crypto staking. Polkadot (DOT), Ethereum 2 (ETH2), and Tezos (XTZ) are some of the coins available for crypto staking on the platform.
Staking on a SaaS Platform
Known as Staking-as-a-Service (SaaS) platforms, these allow you to stake your cryptocurrencies through a third-party platform. Do note that since the third-party platform manages the technical aspect of the staking process, you will be charged a small fee. As such, these platforms are ideal and designed for beginners, less technical investors, or those who simply don’t have time to actively take part in the staking process.
Figment
A popular SaaS platform is Figment. Figment is known to support coins such as Cosmos (ATOM), Terra (LUNA), and Algorand (ALGO). The best part? You can even view the staking data in real-time while calculating your rewards. There is also 24/7 customer service support through email and Telegram if you require any help throughout the process.
Stake Capital
If you’re looking for a platform that offers multiple services on top of staking your crypto, Stake Capital is one to note. It offers features like arbitrage, lending, swapping, and borrowing. Some of the more popular coins that Stake Capital supports include Kava (KAVA), Tezos (XTZ), Cosmos (ATOM).
Staked
Staked is an ideal platform for those who wish to receive detailed staking reports and automated fund transfers. Staked supports digital assets like Polkadot (DOT), Dai (DAI), and Terra (LUNA).
Final Thoughts
If you have yet to start creating sources of passive income, you can now do so easily with crypto staking. You would not need to put in much effort and with staking, you know you’ll be earning consistently. Plus, there are even SaaS platforms that do all the technical work for you so you can easily earn rewards without having to actively manage your account.
Another way to build passive income is by depositing your crypto assets into platforms like Hodlnaut to help you earn interest weekly.
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