Crypto Staking: What Is It and Why It Can Help You

Many of us heard the expression “a penny saved is a penny earned.” Well, in the crypto area, a penny invested comes with a penny earned, thanks to the many investing opportunities. Therefore, lately, crypto enthusiasts have developed impressive portfolios, and the number of exchange platforms has increased.

What Is the Role Staking Plays in This Investing Process?

If we think about staking from the user’s point of view, staking cryptocurrency involves “locking up” a portion of cryptocurrency for a period to contribute to a blockchain network. So, users can earn rewards in exchange, typically in the form of additional coins or tokens.

But the definition may differ from one project to the other. From the technical point of view, staking is the Proof-of-Stake algorithm process that involves appointing a node to validate the next block. As a result, the chosen nodes are referred to as validators.

However, each crypto project may slightly alter the definition and offer different opportunities.

How does Staking Work?

Staking is similar to depositing funds in a high-yield savings account, in which banks lend out your funds and you earn interest on the balance. Users can earn passive income by staking their digital assets without selling them.

How Is the Detailed Process?

If you start staking, you secure your assets to contribute to the security of that network’s blockchain. Your holdings cannot be accessed for months or years if you lock them up. Also, once you begin, there may be no way to “unstake” your holdings. In exchange for locking up your assets and participating in the network validation, validators receive staking rewards in the nominated cryptocurrency.

Because the blockchain utilizes your crypto, it earns rewards while it is staked. Cryptocurrencies that are verified and secure without the involvement of a bank or payment processor allow staking to use a “consensus mechanism” known as Proof of Stake.

Staking Benefits: Myths and Reality?

The primary benefit of staking is that you earn cryptocurrency, and interest rates can be quite high. You can sometimes make more than 10% or 20% per year, and it can be a suitable long-term investment.

You only need to hold a Crypto using the proof-of-stake model. And that’s because nowadays, many PoS cryptos include a delegation model where you may even deposit a tiny amount within a pool to start earning rewards.

Staking & Exchange Platforms

For most users, the easiest path will be to stake through a crypto platform like an exchange. It’s as simple as depositing the coins and staking them. You can stake on popular exchanges like Binance, Coinbase, and BitStamp, as they all offer various delegated staking options. Or, you can experience platforms that have special staking features, like DIFX.

For example, platforms like DIFX have a unique token-staking mechanism and a powerful trading UI. Also, users can explore some features that help them to stake, like custom options. With these custom options, traders may stake or lock in tokens for up to 8 quarters on the exchange-staking platform, resulting in massive rewards.

Other features refer to the possibility of buying and storing cryptocurrency in a fully insured wallet. In addition, users can earn passive income through staking opportunities and multiple rewards programs. Also, by using the platform’s token, users can experience overnight interest rates, staking, and discounts.

Ending Note

Staking crypto can be profitable, and it is a way to earn passive income for long-term believers in crypto who are indifferent to price swings. However, it also comes with a risk, so stake cautiously and do your research before jumping in.

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