If you’re new to the world of crypto investing, you might feel like you need a glossary to keep track of some of the terms and abbreviations. From “fork” to “halving” to “node,” there are plenty of words to brush up on!
Of course, if you’re interested in earning a little more from your crypto, there’s one term that should interest you in particular: staking. But what is crypto staking, and why should you be interested? To learn more, check out our quick crypto staking guide below.
What Is Crypto Staking?
Crypto savings accounts is a way of earning passive income on your crypto without selling it.
This happens in the same way you’d earn interest by depositing money into a high-yield savings account. This deposit allows your bank to lend the money out to other consumers, and they reward you by offering a small percentage of the interest that comes from that loan.
With crypto staking, on the other hand, you’re not allowing an institution to lend out money. Instead, you’re allowing blockchain technology to validate its transactions.
Though this may not sound like much, this validation can help a blockchain network achieve consensus, which is a crucial way to make sure that the network remains accurate and fair for all. To reward you for helping with this validation process, the network offers a small amount of interest in the same type of crypto you’ve staked.
Which Cryptocurrencies Allow Staking?
If you’re hoping to earn some passive income off this financial model, keep in mind that staking isn’t possible with all cryptocurrencies. You’ll need to choose one that validates its transactions using a proof-of-stake (PoS) method. Here are a few popular cryptocurrencies you can choose from:
- Ethereum (ETH)
- Cardano (ADA)
- Polkadot (DOT)
- Luna (LUNA)
- Solana (SOL)
- Avalanche (AVAX)
The number of cryptos using PoS is still growing, as this model is relatively new, so you can expect other currencies to jump onto this list. Popular options like Dogecoin are poised to transition to PoS over the next few years, for example, so check the Dogecoin CAD conversion to see whether it’s right for your portfolio.
How Do You Start Crypto Staking?
Now that you have a better understanding of crypto staking, how do you get started?
First, make sure you have a crypto that uses PoS, and transfer that crypto to a blockchain wallet. Depending on the currency you choose, you may have to go to the crypto’s website to check for compatible wallets. Many popular options like Coinbase also offer in-platform staking opportunities.
You’ll have to meet a minimum staking requirement, meaning the minimum amount of crypto you can “lock” for staking. This minimum varies from crypto to crypto.
Last, join a staking pool and start earning rewards! Be sure to look for a pool with reasonable fees, which often hover between 2-5%.
Get More Out of Your Crypto
Now that you’ve stopped wondering, “What is crypto staking, anyway?” it’s time to put this crypto staking advice to the test! This easy option for passive income is a great way to hold onto your investment while still reaping rewards. With a little research, you can start earning more from your crypto today!
Want more helpful tips like these? Be sure to take a look at our other guides.
Founder Dinis Guarda
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