Introduction
When we talk about BlockChain & CryptoCurrency, people make a lot of money by trading crypto, buying or selling NFTs, or yield farming. HODL crypto in a wallet is a good idea but, what if I say that you can earn passive income by just staking your crypto for a specific time & in return you will get rewards.
What is staking?
- In Blockchain, staking is a way of earning passive income from your cryptocurrency by just locking them for a specific period of time. By staking your crypto, it will be locked for a specific time period on the platform and you cannot sell or trade that staked crypto before the end date. But after the locking period ends, you will get interest and rewards based on your staked amount.
- For calculating rewards most platforms provide one of these two methods: APR(Annual percentage rate) and APY(Annual percentage yield). The rate of APR and APY both depend on the cryptocurrency and the staking platform.
How to earn money by staking?
- Select platforms that are providing staking functionality like Kraken, Binance, etc.
- Check all the cryptocurrencies available for staking on the platform and then choose the currency after comparing their reward rates. If you don’t have the crypto you want to stake, first buy the currency.
- Usually, multiple locking periods are available with an increasing reward rate for a longer duration of lock periods. Choose the locking period that suits you and stake.
- That’s it! Sit back, relax and earn rewards on your staked crypto.
Staking platforms
Binance
- Binance is preferred by users more than most of the other crypto exchanges.
- It offers a great variety of options to generate passive income using staking.
- Binance provides three primary options for staking: locked staking, locked saving, and flexible saving.
- Below are the steps to stake crypto on Binance
- First, navigate to the locked staking page
- Filter available options for staking and find your coin to stake and then click on stake now
- Review the Staking Parameters and Stake
- There are different “duration periods” available. You have to select the one that suits you.
- Then select the “locked amount”. Make sure that the locked amount is less than or equal to your wallet balance of the cryptocurrency you want to stake.
- Once you have entered and reviewed all the values, click on confirm button.
- That’s it you have staked your crypto. Now, wait for the duration period i.e. the lock period to end, and claim your rewards.
AQRU
- AQRU is the most flexible and easy-to-use application for staking.
- One of the biggest advantages of using AQRU is there is no locking period on AQRU, unlike other platforms that mandate users to stake their coins for a specific time period.
Kraken
- In Kraken, you can move your assets to a Kraken account and make passive income.
- In Kraken, you can stake your assets on-chain and off-chain.
- In off-chain staking, assets are redistributed across the internal program to generate rewards based on different strategies.
- In on-chain staking, staked assets are used for proof of stake blockchain validation.
Pros and Cons of staking
Pros
- Earn passive income on your crypto which is better than HODL crypto in your wallet with no rewards.
- High Returns depend on the cryptocurrency you are staking. Some currencies, like Polkadot, provide upto 10-20% reward in a year.
- Staking supports the blockchain network.
Cons
- Staked tokens are locked for a specific period of time and cannot be used for selling or trading.
- Risk of penalty if you unstake before the end of the lock period.
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Conclusion
The blog provides you a smart insight on how you can trade your crypto efficiently. One can either stake their crypto-like SIP amount which can favor them in long term investment. Looking at the dire situation crypto is advancing in, there are numerous strategies that efficiently allow you to build profitable income in the crypto segment. Blockchain can be one of enablers for using crypto more effectively and staking can be made easy as it will be able to provide security.
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