With the advent of cryptocurrency, earning passive income through staking has become ever so easy. A new favorite enjoyed by many is staking. This guide aims to explain what staking is, how to partake in it, and how to earn earnings while doing, well, nothing.
What Is Staking?
Staking refers to a process in which you ‘stake’ your cryptocurrency in a wallet to aid in the facilitation and maintenance of the blockchain the cryptocurrency is on. As a form of payment, one can receive rewards that come in the form of extra cryptocurrency. This is the same as receiving interest on a savings account, but in this case, it is a form of decentralized earning.
How Does Staking Work?
Staking is mostly found on blockchains that function with Proof of Stake (PoS) algorithms or their modulated versions like Delegated Proof of Stake (DPoS). Here’s how it works:
- Locking Coins: You hold a certain cryptocurrency which is stored in a staking wallet.
- Validating Transactions: The staked coins held help in confirming and validating transactions on the network.
- Earning Rewards: Based on the network and amount staked, you will receive your staking rewards.
Benefits of Staking
Some of its benefits include
- Passive income: One of the best advantages of staking cryptocurrencies is the possibility to earn without trading. All you have to do is lock your tokens for a certain period, and you start earning extra tokens through a platform or a wallet.
- Network security and governance: Staking your crypto assets gives an opportunity to earn governance power in the network, this power allows you to vote on key decisions and contribute to the overall security and stability of the network. Staking gives room for reduction in the number of tokens in circulation, making it easier for the asset price to grow.
- Low barrier to entry: Staking requires little or no expertise and funds to start earning. Fortunately, there is no minimum or maximum limit to the number of tokens you have to stake to start earning, and you can start to acquire your staking earn with minimal amounts and grow them over time.
Step-By-Step Guide To Get Started
- Choice of Cryptocurrency
Carry out a necessary research and select a digital asset that supports staking, some popular options include: Ethereum(ETH), Cardano(ADA), Solana(SOL) etc
- Pick a staking platform
You can stake directly on different platforms.
- Joining a staking pool: Here you entrust your digital assets to an existing validator, together with other users. There is a low entry barrier method and you do not require any technical know-how and enormous funds.
- Wallet: There are many wallets with staking features, all you have to do is find the right wallet to stake with.
- Exchanges: Some crypto exchanges allow users to stake assets directly. This makes it easier for users to start their staging journey.
- Get familiar with the staking requirements
Each platform may have different criterias or features particular to them, some of these criterias include
- Minimum Stake: Some platforms and cryptocurrencies do have a minimum amount required for staking.
- Lock-up Periods: Staking programs come with their unique lock-up periods during which you cannot sell or unstake your tokens
| Cryptocurrency | Unstaking period |
| Ethereum (ETH) | 12 days |
| Solana (SOL) | 2-3 days |
| Cardano (ADA) | Instant |
| Sui (SUI) | 0-1 day |
| Tron (TRX) | 14 days |
| Avalanche (AVAX) | 14 days |
| Aptos (APT) | 30 days |
| Polkadot (DOT) | 28 days |
| Ton (TON) | Instant-1 day |
| Polygon (MATIC) | 3-4 days |
| Cosmos (ATOM) | 21 days |
- Fees: Some platforms may charge a compulsory fee for their staking services
- Begin Staking
By now you have selected a cryptocurrency of choice and a suitable platform
- Move your assets to the staking platform.
- Follow the platform’s instructions carefully to commence the process.
- Monitor and reinvest your rewards for the purpose of growth.
Factors Affecting Earning Potentials
Staking earns varies largely based on
- Cryptocurrency: Staking earns or rewards varies based on the asset.
| Cryptocurrency | APY (annual percentage yields) |
| Ethereum (ETH) | 3.30% |
| Solana (SOL) | 6.84% |
| Cardano (ADA) | 2.82% |
| Sui (SUI) | 3.05% |
| Tron (TRX) | 4.85% |
| Avalanche (AVAX) | 7.92% |
| Aptos (APT) | 7.00% |
| Polkadot (DOT) | 11.41% |
| Ton (TON) | 3.13% |
| Polygon (MATIC) | 6.10% |
| Cosmos (ATOM) | 17.91% |
- Amount staked: Staking earns depending largely on the amount staked. The higher the amount the higher the potential earnings.
- Price volatility: This is a major factor that influences staking earns, staking rewards are distributed in the form of the cryptocurrency staked, and it means that if the value of the asset drops, consequently, your rewards (and the overall value of your assets staked) decrease. However if there is an increase in the value of your staked asset, your rewards increase as well.
Tips For Successful Staking
- Do Your Own Research(DYOR): It is very necessary and compulsory for one to carry out research on the cryptocurrency and the platform before proceeding.
- Diversify: Always select different assets to stake on, do not invest all your funds in one staking program.
- Stay Updated: Monitor the market trends, network updates and earning structures.
Conclusion
Staking of cryptocurrency is a great way to earn passive income while contributing to the stability of blockchain networks. You can make the most out of staking if you do your research right and invest timely.
