hy leave your money in the bank and earn 0.5% interest per annum, when you can earn between 1%-300% and beyond? Let us learn how we can stake and make our idle money/crypto work for us. Staking is extremely simple to understand and do. It is the act of delegating several tokens to earn rewards for doing so, usually the token you are delegating.
What is Cryptocurrency Staking?
There are two ways to generally stake cryptocurrencies. You can either Delegate or Validate your crypto tokens.
Delegating your crypto is the easiest way to stake and is done so by locking up your crypto assets to a Validator which will earn you rewards for doing so.
On the other hand, being a Validator can be more confusing for the average user and will require specialised knowledge, computers and equipment, as well as a large amount of crypto that will be required to lock up and stake.
Many of the largest Crypto blockchains, CEXs, Wallets and protocols offer users the ability to stake either a large variety of Cryptocurrencies and/or even their own native token in either form; delegating or validating.
Staking is an amazing way to create passive income as some protocols offer great APY/APR %s. There are various ways of Staking within the world of Crypto, such as:
- Proof-of-Stake Blockchains like Ethereum allow users to secure the network by Staking $ETH and running a node. Be aware, a minimum of 32 $ETH is required.
- Staking Pools are made up of tokens delegated by multiple users who lock up their tokens to validator nodes.
- Wallets like @Keplrwallet allow users to stake native tokens on the #Cosmos blockchain. There are many other wallets on other networks like #Cardano that have staking capabilities.
- Centralised Exchanges aren’t designed just for trading, they have their own staking pools of the most popular #Crypto so anyone can get involved, without having to invest too much! CEXs like ByBit are a great place to get started: https://partner.bybit.com/b/StakingGuide.
There are other forms of staking that are unique to some protocols like Lido DAO which is an open-source ‘Liquid Staking’ platform for Proof-of-Stake (PoS) blockchains.
What is Liquid Staking?
Generally, when users stake crypto, it requires them to lock their tokens up without being able to use them until they un-stake their tokens.
However, Liquid Staking allows users to access and use their staked tokens which in turn, provides users with complete control over their assets.
This is what true decentralisation is all about.
Proof-of-Stake (PoS) Blockchains
Proof-of-stake is a consensus mechanism used by some blockchains which process transactions and creates new blocks. This is done to validate all the records into a distributed and secure database.
A validator node will check transactions, verify all the activity, vote on upgrades/proposals, and keep proof and maintain all of the recorded data.
Here are a few Proof-of-Stake blockchains/cryptocurrencies:
- Avalanche – $AVAX
- BNB – $BNB
- Cardano – $ADA
- Cosmos – $ATOM
- Ethereum – $ETH
- Fantom – $FTM
- Solana – $SOL (also uses a Proof-of-History consensus mechanism)
There are many other PoS cryptocurrencies and blockchains that you can find!
Centralised Exchange (CEX) Staking
Although it is not advised to hold or stake your crypto assets in a centralised exchange and if you are going to do so, I would recommend using a trustworthy CEX.
Most CEXs do not require any lockup period, however, they will require just a small withdrawal/commission fee.
It’s common for a lot of users to stake on a CEX. Personally, my favourite CEX and destination for staking is Bybit, as they offer up to an amazing 30% APY on a variety of the greatest Cryptos.
ByBit is also a great choice as they hold a lot of liquidity within the protocol, which goes a long way in this industry.
Staking on ByBit is extremely easy and has over 120,000 users that utilise their incredible platform, which has seen over $500M invested into staking and yielded users over $6M in total!
If you use our link you can earn up to $30,030 in deposit bonuses! You may as well stake some of that free money while you’re at it: https://partner.bybit.com/b/StakingGuide.
Binance – The most popular Centralised Exchange in the world:
Staking pools tie in with Proof-of-Stake blockchains as they merge multiple PoS validators into a single pool, which in turn increases the staking rewards.
Staking pools allow multiple users/delegators to lock their tokens into a validator node, so delegators don’t have to stake large sums of crypto to become a validator.
It’s important to understand that some staking pools have certain rules and T&Cs. For example, most pools have a % fee for withdrawing your tokens, generally starting at 5%.
Not only that, but most staking pools will require users to lock up their tokens for an ‘X’ amount of time. Some may be a day, week or even over a year in some cases.
It is also necessary to do your own research on the validator you will be staking your crypto with. In some cases, validators will increase their staking commissions from 5% up to 100%, which would end up with a total loss of assets when you decide to un-stake!
For example, you can stake $OSMO on the Cosmos Keplr wallet to an official delegator for a minimum of 5% commission and a lockup period of 14 days! Which is very good.
As mentioned above, some wallets like Keplr allow users to stake and earn on cryptocurrencies that are connected to the Cosmos network.
Staking through your DeFi wallet is known as the best and most secure way, as it is done in a decentralised manner with no central authorities to dictate your decisions. Your wallet, your bank.
To stake on a crypto wallet, you will need to send assets from a CEX, like ByBit (https://partner.bybit.com/b/StakingGuide). From there you can earn very high rewards, staking your favourite and idle IBC-enabled cryptocurrencies.
There are other wallets on other blockchains that allow users to stake directly from their wallet, however, Metamask which is the most popular wallet used on EVM-compatible networks does not currently have this feature. Therefore, you will need to find protocols that offer staking rewards, of which there are many.
What are the main benefits of Staking cryptocurrencies?
Well firstly, the fact you are earning passive income from idle money/crypto. However, here are some other benefits:
- It’s a good way of investing if you plan to hold long-term
- Most methods of staking do not require any technical experience
- Most methods of staking do not require any technical equipment, like computers or processors
- By staking a cryptocurrency, you help secure the network (as mentioned above, in the Proof-of-Stake section)
- Compounding allows you to stack up your assets and earn more staking rewards, upon distribution! (More on compounding below)
- Staking on Centralised Exchanges allows you to stake directly in the palms of your hands, through your smartphone! Check out staking on ByBit – https://partner.bybit.com/b/StakingGuide
The power of compounding is a popular and battle-tested technique used for the steady growth of wealth and asset acquisition.
Most protocols that offer staking rewards allow you to withdraw your rewards and compound them back in, to earn more crypto. Some protocols even have an auto-compounding effect which will automatically claim and compound your rewards, every time the rewards are distributed!
If you don’t want to compound, you can simply claim your rewards and use staking as a source of passive income.
If you believe in a Crypto protocol and you’re investing/holding for the long term, it may be a good idea to stake your idle tokens. After a year or more of staking, you will see a huge difference in your portfolio and especially if you are compounding as often as you can.
CLAIM your Bybit BONUS here: https://partner.bybit.com/b/StakingGuide