Cryptocurrency staking

You can make money on cryptocurrency in different ways. Mining, trading on the stock exchange, etc. Staking of tokens is gaining more and more popularity. It reduces certain risks and allows you to increase capital.

What is cryptocurrency staking in simple words and how you can earn more than 1200% per annum on it.

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What is cryptocurrency staking in simple words and what are its features.

Stacking has emerged as an alternative way to support the blockchain network using less power consumption. In fact, it opposes the Proof-of-Work protocol, which requires significant computing power.

Since 2017-2018, Bitcoin began to be criticized for its high consumption of electricity and causing harm to the environment. The blockchain runs on a proof-of-work protocol that uses computational power to solve mathematical problems.

  1. When the correct answer is found, information about the transaction is added to the blockchain. Miners are rewarded for this.

Stacking works differently. It also requires confirmation of the validity of the block (transaction). However, for this, not miners are involved, but validators. These are the owners of a certain number of coins who have the right to decide on the reliability of the block. Validators also use hardware: GPUs. True, their power is needed in a much smaller volume than with the Proof-of-Work algorithm.

Nowadays, pure PoS consensus is rare. Investors do not want to risk using a large number of digital coins, as this increases the risk of losing funds when the price of a cryptocurrency falls. Therefore, more and more staking pools appear, where several users of the blockchain network are combined, or delegated proof of stake is performed.

The latter is a relatively new version of the protocol used to improve the security of the blockchain. DPoS allows the token holder to delegate verification rights to delegates. They, in turn, unite in a group and seek consensus among themselves.

  1. The use of alternative methods of working with PoS consensus allows small investors to democratize access to cryptocurrency staking opportunities.

Stacking token DeFi token UNI

UNI staking token

UNI token. Many exchanges offer UNI token staking, and even Metamask will allow you to stake cryptocurrency using simple methods on various DeFi platforms. The income of the token is high and currently more than 11% per week, the indicators are stable - otherwise we would not have written about this token for staking.

Sushi Staking Token

Sushi Staking Token

Stacking of the Sushi cryptocurrency, which recently entered large exchanges, allows you to consistently receive rewards of more than 9% per week, which is at least 400% of the annual profit on the staking of tokens. Now the volume of tokens is not very high, about $ 90 billion, so payments to network participants are extremely high.

Polkadot Stacking Token

Polkadot Stacking Token

Polkadot DOT is a new type of DeFi token that millions of people once chased to buy it. Those who were lucky enough to buy it at the lowest price have already made their profit. At the moment, staking Polkadot tokens also allows those who are just entering the DeFi market to earn money. Contact us for a consultation.

Stacking token Chainlink token

Staking Chainlink

Chainlink token is # 4 on our list of trusted staking tokens. This does not mean that he is the last in terms of indicators, not at all. Chainlink cryptocurrency staking is for the most part much more profitable than other DeFi tokens with higher income indicators. Common exchanges for working and staking a token are Binance and Uniswap.

How you can make money on cryptocurrency staking.

The essence of the algorithm is for users to leave a certain number of coins on the account to resolve the consensus on the blockchain network. As a reward, they receive a flat rate. This is how PoS compares favorably with proof of work.

This algorithm resembles a bank deposit. You keep a certain amount of funds, for which you receive a fixed percentage of the amount. The more cryptocurrency coins you hold, the higher the chance that the system will reward you for reaching consensus on the network.

The amount you need to freeze depends on the type of cryptocurrency you want to work with. For example, for Ethereum, you need to hold 32 coins to become a validator.

  1. Naturally, not everyone can afford such amounts for staking tokens, so many large trading platforms offer to stake with them. This is an easier way, since the user does not need knowledge in the technical part of the blockchain, the availability of the necessary capacities on the equipment and a significant amount of digital coins.

The essence of this proposal is for the user to postpone a certain number of coins on his account, which is used on the crypto exchange, like a deposit. Moreover, the retention of the cryptocurrency occurs for a certain period: a day, a week, a month, etc. The longer the retention period, the higher the reward will be.

The platform purchases the necessary equipment on its own and becomes a validator. The earned coins are distributed as a percentage among the members of the general pool.

Storing staking tokens.

The storage of digital assets for PoS operations comes in two flavors: rigid and flexible. In the first case, the user has to actually freeze their coins for a fixed period.

At the same time, it is impossible to withdraw, exchange or send these digital assets until the set period ends. As a result, this carries certain risks to the owner: the rate of cryptocurrencies is unstable and in a month it can fall significantly, which will lead to a loss of money.

Flexible storage is based on the principle of freedom of choice. As long as you keep digital coins in your account, the system will charge you interest based on the amount. At the same time, you can withdraw cryptocurrency for sale at any time. This reduces the risk of volatility of cryptoassets, and thus income. As a rule, this method has less attractive conditions for storing tokens: the interest rate becomes lower.

Platforms where you can earn on cryptocurrency staking.

Understanding what cryptocurrency staking is in simple words, you need to find out where you can use this method of generating income. Let's note right away that PoS is not used in all blockchains.

Therefore, it is necessary to select coins that work on this algorithm: ETH, ADA, TORT, DASH, etc. The second step is finding a profitable interest rate. Stock up on a calculator, as you will have to do a lot of calculations.

You can get income using this method both independently, by providing equipment and the required number of coins on the network, or by connecting to other platforms. Among them, it is worth highlighting the exchanges:

  1. • Binance
    • Coinbase
    • Kraken
    • WhiteBit.

Moreover, the platforms offer to use a variety of crypto assets, and the essence of staking is reduced to a regular deposit, as in banks. The user leaves a certain number of coins on a separate account (the platform offers a certain range, for example, on Binance 1-500 DASH) for a specific period. The interest period is indicated when interest ends, the calculation of the yield and the size of the interest rate.