Last Updated on May 24, 2023 by asifa
People use cryptocurrencies more for investing and generating extra income. Staking is one of the ways to earn passive income in crypto. Below we’ll talk more about what crypto staking is and how it works.
What is crypto staking?
Staking is a way to generate passive income from cryptocurrencies. It works based on the PoS algorithm. This means that users keep the network running. How exactly?
1. The user sends assets to staking.
2. Takes part in confirming transactions.
3. Takes part in creating new blocks.
The user is paid for this work. The more assets a user sends to the stacking pool, the more income he receives. Besides the amount, the yield is influenced by:
– conditions of the project
– period of stacking.
For example, the yield on Polkadot token staking is 14%.
Validators are participants in the stacking process. They manage nodes and act as PoS miners. Holders of crypto can delegate it to a validator and take part in staking.
How does staking work?
In the scheme of work, staking resembles a bank deposit. The user needs to “freeze” assets on the account and send them to the project’s liquidity pool for a certain period of time. When the period of shaking ends, the user receives the sent assets and payment.
An important advantage of staking is that it is easy enough for beginners. Staking does not must any special skills. The platform handles the technical details.
How to stake crypto?
To send assets to staking, the user needs to:
- Select how you want to stake. There are two ways — delegating and running your own node. In the first case, the user uses an off-the-shelf solution and pays a commission to the validator. In the second case, the user develops the node himself. This requires high technical skills.
- Choose an asset and a platform for staking. In order for staking to bring income, it is important to study information about the project.
- Accumulate or buy tokens from the platform.
- Determine the amount of time you are willing to send assets to the staking platform.
- Familiarize yourself with the conditions of profitability.
Popular platforms that have the functionality of staking:
Staking for the crypto investor
Staking has made it possible for users to raise capital without much technical skill. Even beginners can place assets and earn a regular income.
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