How to Cryptocurrency Stake
Do you know that there is a purest way of participating in a cryptocurrency other than trading? If you don’t want to purchase expensive gear and “mine”, you can simply cryptocurrency stake and earn passive rewards in some blockchains.
In this article, I will show you how you can stake your cryptocurrency and earn money; after all, it is 2021.
But first, the basics:
What is Staking in Crypto?
If you are active in crypto circles, you might have heard about staking and mining. They serve the same purpose: confirming transactions and participating in blockchain security.
In cryptocurrency staking, you would commit to locking his assets in an official cryptocurrency wallet to maintain the operations of a Proof-of-Stake blockchain.
Proof-of-Stake public blockchains are more energy-efficient and comparatively secure. Examples of these networks include Cardano or Tezos.
The rate at which a user earns a reward depends on the number of coins staked or locked in the official wallet. As expected, the more coins locked, the higher the chances of the network picking you up to validate a block and earn rewards.
2 Ways of Staking Cryptocurrency
With the rush to shift consensus from mining to staking, there are two popular ways of staking crypto and helping your favorite blockchain become robust.
One, you can stake directly on a blockchain. For example, if you own at least 32 ETH, you can lock your coins on the official Eth2 address, earning around seven percent interest per year. But if 32 ETH is too steep, you can opt for Tezos. All you need is 8k XTZ coins and run a full node. There are other Proof-of-Stake blockchains to stake from, including Cardano, Icon, and Algorand.Here are two sure-fire ways of #StakingCrypto. 🔥 You either stake directly on a #blockchain or delegate your coins to a third-party vendor. Read more here: Click To Tweet
Two, you can delegate your coins to a third-party validator. This crypto staking style has no limiting thresholds—32 ETH is pretty steep for most enthusiasts. Common delegators are popular centralized exchanges like Binance, which have a staking service. There, a user can lock assets and earn a guaranteed, stable income. Other providers are Coinbase and Gemini—two regulated exchanges operating from the U.S.
How to Stake Ethereum (ETH) via a Cryptocurrency Exchange
Since the latter is a popular cryptocurrency staking method, let me take you through how it is done.
- First, you need to create an account, say at Coinbase, and buy some ETH
- Navigate to the Ethereum Assets Page and follow prompts
- If eligible, your specified ETH amount will be converted to ETH2 and staked immediately for a 5% interest rate.
Cryptocurrency staking is one way of directly supporting a Proof-of-Stake blockchain without necessarily buying expensive hardware. It is also rewarding regardless of the staking method chosen. More investors are opting to stake their cryptocurrency to earn passive income while supporting technology without damaging the environment.
Hopefully, this article guided you in your first steps into cryptocurrency staking. If you are interested to know more about Ethereum staking, check out this informative piece.
Dalmas is a very active cryptocurrency content creator and highly regarded technical analyst. He’s passionate about blockchain technology and the futuristic potential of cryptocurrencies.