Many people believe that the only way to make money with cryptocurrencies is through Trading, but because this looks so complicated, most end up looking elsewhere.
Earning money with crypto is relatively straightforward, and Trading is not the only option. Therefore, we will show you another view into crypto Earning through Staking.
Staking is a low-risk and easy-to-implement investment strategy for novices. This helps you generate passive income from your cryptocurrency investments.
What is staking?
Simply said, crypto staking is a method for earning interest (or “rewards”) on your cryptocurrency.
This is achieved via a Proof of Stake (PoS) blockchain-based coin. Proof of Stake is more secure and energy-efficient than the Proof of Work mechanism, which is used by huge crypto assets such as Bitcoin and Ethereum.
The Proof-of-Stake blockchain concept is used to validate transactions. Investors can “stake” their coins to validate transactions and gain incentives in exchange. Your coin will be locked while staking until it is “unstaked.”
Although this appears to be a complicated procedure, several cryptocurrency exchange services, such as Coinspot, have simplified staking for the average investor. You can read our CoinSpot reviews to learn more about staking on this exchange.
How profitable is staking?
Depending on the staking platform, the cryptocurrency, and the number of users actively staking a particular coin, the staking incentives you can get vary dramatically.
The rewards for the most popular cryptocurrencies, such as Ethereum, Cardano, and Polkadot, range from 5 to 20%. In the case of smaller cryptocurrencies, these returns can exceed 100%.
You can earn varying rewards depending on the cryptocurrency exchange where you stake your coins. Some platforms opt for a fixed yield for a specified lock-up period with a maximum reward per user. In contrast, others modify their yield daily based on the remaining staking rewards in a particular pool. Other trading platforms have varying restrictions and incentives.
Lastly, it is essential to recognise that staking returns might vary based on the number of participants and the overall reward pool.
Coinbase, Binance, and CoinSpot now provide some of the highest staking rewards. For example, the table below displays the stated APY for each crypto asset that can be staked on Coinspot.
|
Cryptocurrency |
Interest rate (APY) |
|
Algorand (ALGO) |
6% |
|
Axie Infinity (AXS) |
78% |
|
Avalanche (AVAX) |
6.9% |
|
Binance Coin (BNB) |
5% |
|
Cardano (ADA) |
5.1% |
|
Cronos (CRO) |
11.1% |
|
Cosmos (ATOM) |
10.9% |
|
Elrond eGold (EGLD) |
12.1% |
|
Fantom (FTM) |
4.2% |
|
Flow (FLOW) |
6.5% |
|
Harmony (ONE) |
9.2% |
|
Polkadot (DOT) |
12.5% |
|
Kusama (KSM) |
18.5% |
|
Tezos (XTZ) |
4.2% |
|
Kava (KAVA) |
23.5% |
|
Tron (TRX) |
5.9% |
|
Polygon (MATIC) |
12.8% |
|
Terra (LUNA) |
8.1% |
|
Veracity (VRA) |
19.2% |
|
Wanchain (WAN) |
6.3% |
|
Zilliqa (ZIL) |
15% |
Please note that APY is only an estimate and subject to fluctuations.
Is crypto staking risky?
Yes. As with any form of investment, you must consider the risks associated with crypto.
Due to their volatile nature, the value of cryptocurrencies may collapse suddenly. In the event of a price decline, the loss may outweigh the interest collected to date. As their value is fixed to the U.S. dollar, staking stablecoins is less risky than staking traditional cryptocurrencies for risk-averse investors.
In addition, you can’t access your staked coins after they are locked up. This might be frightening since you cannot withdraw your money if market conditions appear unfavourable. Thus, you can opt for staking plans with shorter lock-up periods, such as 7-Day, as opposed to monthly or longer time frames, or choose a flexible savings plan that permits instantaneous withdrawals.
You may invest in a scheme that promises 10x or even 100x returns on a small token investment. However, it is challenging to discover these small tokens with tremendous potential. You might instead invest in established coins like BTC, ETH and ADA. While your interest gained may not be 1000% APY, you will be sure that the coin is likely to live, and you will still be able to take advantage of interest rates substantially greater than those offered by banks.
How to start crypto staking?
Before you can begin staking, you must first own digital assets that can be staked. If you have already purchased coins, you must move them from the exchange or app where you bought them to an account that supports staking.
Most larger cryptocurrency exchanges, such as CoinSpot, Coinbase, Binance, and Kraken, provide staking options on their platform, making it easy to put your coins to work.
CoinSpot will serve as an example to illustrate how to stake your coins. Staking cryptocurrency on Coinspot is simple and free of charge, with a wide range of cryptocurrencies supported. You only need to follow these five simple steps:
2. Deposit AUD via the ‘Deposit AUD’ tab
3. Buy one of the staking-eligible cryptocurrencies via the “Buy/Sell” option
4. Select the desired cryptocurrency via the ‘Wallets’ option, and then click ‘Earn’ on the left.
5. Confirm by clicking the ‘Stake’ button
Staking on CoinSpot. Image: CoinSpot
After completing this step, you will instantly begin to receive daily rewards. You can view your daily earnings, rate of return, estimated payment amount, and more by visiting the staking page in your wallet.
