Many people still believe that the only way to profit from crypto assets is through trading. However, there are other ways to earn additional income from cryptocurrency. Staking is the trick.
Crypto Asset Staking
What exactly is staking? Staking is the process of actively participating in transaction validation on a blockchain using a Proof of Stake (PoS) mechanism (similar to mining). Staking coins is also known as the process of locking crypto assets in a wallet for a set period of time in order to receive rewards.
Anyone with the minimum number of tokens required for staking on a proof of stake blockchain can participate in validating transactions on the blockchain and be rewarded for doing so.
The staked or staked crypto assets will be stored in the system during the process to maintain the network for a set period of time. You can receive benefits according to the provisions during the storage process.
Proof of stake (PoS)
The basic idea behind this algorithm is that participants can lock coins and, at regular intervals, the protocol will randomly assign one of the participants the right to validate the next block.
The more coins at stake, the more likely it is that you will become a validator. As a result, the determination of which participant creates a block is not based on problem-solving abilities, as is the case with a blockchain with a Proof of Work mechanism.
How Crypto Staking Works
Staking involves validators locking their coins so that they can be randomly selected by the protocol at certain intervals to create a block.
Usually, the participant who bets the larger amount has a higher chance of being selected as the next block validator.
This allows blocks to be produced without relying on specialized mining hardware, such as ASICs.
While ASIC mining requires a significant investment in hardware, staking requires a direct investment in the cryptocurrency itself.
So, instead of competing for the next block with computational work, PoS validators are selected based on the number of coins they stake.
Platform for Staking
Staking crypto assets can be done individually, in a staking pool, or through an exchange. By yourself, you must provide a wallet that meets the terms of the crypto asset you wish to stake, as well as the minimum amount of crypto required for staking.
Some coins require a certain number of coins to be bet. While Dash requires 32 ETH, Ether requires 1000 DASH.
Then you have hardware that must be connected to the network 24 hours a day, seven days a week, so you need a reasonably stable device and a smooth internet connection. You can also take advantage of a virtual private server (VPS). Running in the cloud will add a lot of convenience to stakeholders as it minimizes the hassle of maintenance.
Once the wallet is set up, you can start the staking process. Make sure to be connected to the internet at all times, unless you are using a VPS. At this point, it's just a matter of checking the nodes occasionally to see that everything is running smoothly.
The solo staking process is quite complicated for beginners, so for beginners who want to try betting on this crypto asset more easily. You can choose a staking pool or stake through the services provided by the exchange.
Choice of Staking Points
What is a staking pool? A staking pool is a group of coin holders who pool their resources to increase the chances of validating blocks and receiving prizes or rewards. They combine power and share the prize in proportion to their contribution to the pool. Setting up and maintaining a stake pool often requires a lot of time and expertise.
Staking pools tend to be most effective on networks where the technical barriers are relatively high. As such, many pool providers charge additional fees resulting from this process. That is, if you join the prize pool, you will not get as much as if you do it solo.
This is because you have to share profits with other people who are members of the pool.
But using this pool has the advantage of being much more consistent, requires a lower minimum balance, and is easier for beginners to use. Next to locking assets in the exchange, this is the easiest way to stake. However, not many exchanges provide this service.
The exchanges that already provide them include Binance, Kraken, OKEx, Bithumb and others.
In this exchange, you simply deposit the number of coins that you want to stake. The process on this exchange will run automatically, and users only need to check at least once a week to find out how much interest is being generated.
How to Stake
Research
The first step in staking is to conduct research. You must understand how staking works, as well as the benefits and drawbacks. You must also understand which crypto assets can or cannot be staked, because assets that use a proof of stake mechanism can only be staked. Assets with a proof of work mechanism are not stakingable.
To Define Crypto Assets
Select the crypto asset you want to stake. You can look at coinmarketcap.com to find out which crypto assets are popular. You can also find out the minimum number of crypto assets that need to be staked to prepare funds.
Prepare Funds
If you've decided which crypto asset to stake and the minimum amount, the next step is to set aside funds to purchase these assets. Pay attention to the minimum betting requirements, such as the minimum and maximum amounts that can be locked, the time span for locking the asset, the prize or reward that can be taken, and so on.
Choose a Staking Pool
The easiest way to stake is to use stake on an exchange or staking pool.
You can find various exchanges and pools that offer this service on Coinmarketcap or surf the internet. Make sure you choose a stake place that is safe, reputable, and guaranteed.
Staking Benefits
Easy
Rather than trading, staking is easier to do. Because you only need to deposit some crypto and wait for some time to enjoy the benefits. This is certainly different from trading, which requires technical analysis skills that are quite difficult to understand in a short time.
Less Risk
Staking crypto has less risk than trading or mining. You only need to prepare a certain amount of cash. The greater the capital, the greater the income obtained. In addition, staking does not require a mobile phone or computer with high specifications.
It doesn't take up any time.
If you are a day trader, you are already aware that trading takes a significant amount of time because you must pay close attention to market movements. This is distinct from staking, which does not require constant monitoring.
You simply need to keep track of when the benefits listed by the staking pool or exchange that you use for staking are delivered. This method is thought to be a less expensive and less risky way of participating in the blockchain network validation process.
Furthermore, it is an environmentally friendly and energy efficient method that has the potential to generate additional revenue in the digital asset market. That is the complete definition of staking, which is a different way to earn money.
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