Staking, because of its relatively quiet nature, appeals to many investors unwilling to have to track the prices of certain cryptocurrencies on a day-to-day or even hour-to-hour basis. In the case of staking, we immobilize a crypto-asset for a certain period of time and we are sure, at the end of this period, to obtain passive income – in the indicated currency. But how do you go about staking a cryptocurrency in practice?
To “staker” a cryptocurrency, you have three main choices: delegate the task to a platform; use the dedicated wallet of this cryptocurrency; use a Stake Box. However, the first step is to choose one or more cryptocurrency that we will want to immobilize on a duration usually up to a year.
Choose one or more cryptocurrencies
It may be a good idea to first choose the cryptocurrency (s) for which you want to set up this type of investment. The site Staking Rewards is a good place to start: it displays over 260 currencies that can be used for staking. The Rewards column shows what the annual return is for a given currency. Even though it might be tempting, it is not advisable to choose a cryptocurrency to staker on the sole criterion that it pays a large interest, and especially if you have the slightest doubt about its longevity. It is safer to invest in a cryptocurrency with a large capitalization (see the Market Cap column of Staking Rewards in the illustration below) and which seems to have a real future. On specialized Discord forums, Telegram or Signal, or on Twitter, you can spot projects supported by experts in the field. If in doubt, you can start by staking stablecoins like USDT or DAI, or crypto whose value is backed by a traditional currency such as the dollar. Whatever happens, you will ultimately reap the dollar amount you invested, with the interest accrued during the period of immobilization of this amount.
A word of advice: don’t put all your eggs in one basket. It is best, if you can, to spread your investment over several different cryptocurrencies. In this way, you can better judge the performance of each, and above all maximize your chances.
Delegate the task to a platform
Delegate staking to a platform (or exchange) such as Kraken, Binance, Crypto.com or Coinbase is the simplest form. By force of circumstances, an exchange will take a commission on the staking operation and therefore, the return will be lower than if you go through a wallet (wallet). In addition, the staking may differ from one exchange to another. For example, atfall 2021 on a currency such as ALGO, the reward offered over the year was over 8% on Binance and around 4.5% on Coinbase. Also note that on some exchanges, the return will be more interesting depending on the volume stake for a given crypto-asset.
On Binance, staking is accessible from the Binance Earn menu. It is good to know that in this exchange, a staked currency is referred to as Fixed (fixed) as opposed to Flexible. If you choose a Flexible mode investment, you can withdraw your assets at any time, but the proposed return is much lower.
As you will see if you closely monitor your investments, dividends are usually paid on a daily basis. Otherwise, the APY mode (compound income) must be activated.
Staker cryptocurrency on a wallet
Usually, each cryptocurrency has its own wallet native, or even can be linked to one or more wallets. You can use this wallet to proceed with the staking. The reward is higher on a wallet of the Challenge (decentralized finance) than on an exchange like Coinbase or Kraken because of the absence of an intermediary.
Staking is usually done from an ad hoc website that establishes the relationship with the wallet – for example, the Pancakeswap site linked to the MetaMask wallet makes it easy to stake CAKE currency.
Wallets such as Atomic wallet Where Trust Wallet are often recommended for staking, because they make this very easy, on various cryptocurrencies.
Leverage a Stake Box
The third solution may consist in becoming a “validator” of a currency based on the principle of ” proof of stake ”, Or a simpler approach than the mining original currencies such as Bitcoin – details can be found in the definition of staking. This approach has its limitations: the number of validators is generally very limited. And usually a minimum of tokens for a chance to become a validator.
We can use his computer to operate the validation but it is often impractical. However, there are Stake Box or small dedicated boxes built by Raspberry and which are dedicated to the validation of certain cryptocurrencies. These are very young currencies and there is therefore a part of bet in such an approach.
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