Staking, because of its relatively quiet nature, has attracted many few investors who want to track the prices of certain cryptocurrencies on a day-to-day or even hour-by-hour basis. In the case of staking, you immobilize a crypto-asset for a certain period of time and you are sure, at the end of this period, to obtain passive income – in the indicated currency. But how to do in practice to stake a cryptocurrency?
To “Stake” a cryptocurrency, you have three main choices: delegate the task to a platform; use the dedicated wallet for this cryptocurrency; use a Stake Box. However, the first step is to choose one or more cryptocurrenciescryptocurrencies that we will keep immobilizer on a durationduration possibly up to one year.
Choose one or more cryptocurrencies
It may be a good idea to first choose the cryptocurrency(s) for which you may prefer this type of investment. The website 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. Although it might be tempting, it is not advisable to choose a cryptocurrency to steal on the sole criterion that it pays a lot of 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 the specialized Discord forums, TelegramTelegram or Signal, or on TwitterTwitter, you can find projects supported by experts in the field. If in doubt, you can start by stitching stablecoins as USDT or DAI, or crypto whose value is backed by a traditional currency such as the dollar. Whatever happens, you will ultimately collect the dollar amount that you have invested, with the interest likely to immobilize it 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 to exchange) such as Kraken, Binance, Crypto.com or Coinbase is the simplest form. By necessity, 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). Also, staking may differ from one exchange to another. For example, at thefallfall 2021 on a coin such as ALGO, the offered reward over the year was over 8% on Binance and around 4.5% on Coinbase. You should also know that on certain exchanges, the return will be more interesting depending on the volumevolume staked 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 return offered is much lower.
As you will see if you follow your investments closely, dividends are paid every day. Otherwise, you must activate the APY mode (compound income).
Stack cryptocurrency on a wallet
Usually, each cryptocurrency has its wallet native, or even can be connected to one or more wallets. You can use this wallet to proceed with staking. The reward is higher on a wallet of the ChallengeChallenge (decentralized finance) than on an exchange like Coinbase or Kraken due to 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.
Leveraging a Stake Box
The third solution can consist in becoming a “validator” of a currency based on the principle of ” proof of stake which is a simpler approach than the miningmining native currencies such as Bitcoin – the details defined in the definition of staking. This approach has its limitations: the number of validators is usually very limited. And it is necessary to stake a minimum of tokenstokens for a chance to become a validator.
You can use your computercomputer to operate the validation but it is often impractical. However, there are stake box either small dedicated boxes integrated by Raspberry and which are dedicated to the validation of certain cryptocurrencies. These are young hard currencies and so there is a gamble in such an approach.