Crypto staking is a process used to verify cryptocurrency transactions. It involves committing holdings to support a blockchain network and confirm the transactions. It also allows participants to earn passive income on their holdings.
If the token you hold allows staking, you can stake some cryptos and earn a passive income. It happens via a staking pool, which can be compared to an interest-bearing savings account. Like a savings account, you can earn anywhere between 5 to 20 percent per annum on the amount of cryptos you stake.
Why do you earn the rewards, you may ask. It is because the blockchain puts your holding to work. They would use a consensus mechanism called proof-of-stake to ensure all transactions are verified and secure. Your crypto, meanwhile, also becomes a part of the process if you have staked it. Cryptocurrencies like Solana, Polkadot, Ether, and Cardano allow staking currently.
How to earn via crypto staking?
Risks of crypto staking
Are there any risks of crypto staking? You bet, there are. One, considering the volatility of cryptos, the coin you put for staking might fall. Plus, if you are a day trader, you might miss the opportunity of betting on lucrative as you cannot use the coins for several weeks to months.
(Edited by : Yashi Gupta)
First Published: Dec 24, 2021, 02:29 PMIST