WHAT IS STAKING IN CRYPTO? IS IT WORTH IT IN 2023? (2024)

In light of recent $30 Million fine to Kraken by SEC, investors are now thinking twice about choosing right platform for staking. You can learn all about staking here if you planning to invest in crypto. Does the ‘Crypto Staking’ technobabble sounds strange to you? No need to spook out! Crypto staking is a low-risk investment opportunity to grow your digital asset without selling or trading them.

In staking, you lock your crypto holdings and earn interest or rewards.But to ensure a return on investment, you first need to learn about which crypto has highest staking rewards and guarantees results. You’ll find everything about crypto staking and which crypto will boom in 2023 in this article. Just keep reading…

What is Staking in Crypto Currency?

You can see staking as putting crypto-equivalent money in a high-yield savings account; where the bank invests your savings and in return for the money locked up in the savings account, you receive a portion of interest earned. You have no control over the investment and may get a very low percentage of the earned profits.

However, in crypto staking, you lock up your digital asset on blockchain in your digital wallet or smart contract. In exchange for that, you earn interest or rewards calculated in percentage yield. And here comes the good part, the returns offered are typically much higher than any interest rate offered by banks.

The interest is paid in the form of cryptocurrencies, usually the native token of the platform you’re staking your crypto on. If you’re an angel investor, you need to know that bitcoin has a much lower chance of generating a stake, making them less profitable than tokens and smaller altcoins.

How Does Staking Work?

To safely stake, you need to grasp the concept of what blockchain networks do. Here’s a quick tour to help you understand the basics:-

Blockchain is like a database, like the one you create in the spreadsheet, and then implies certain restrictions on it. In a blockchain, user can add data but has no permission to delete any data. This means every entry is saved for eternity and gives you the security of ownership.

Each entry (new block) is cryptographically linked with the last entry-helps in maintaining history. Simply put, blockchain is immutable and decentralized. Even if the coolest hackers try to access and change data, the digital fingerprint saved with each block alters, making it evident in the system.

Staking is a way of preventing errors and fraud in this process. Users put some of their cryptocurrency in line when proposing a new block or voting to accept any proposed blocks.

Usually, the more at stake, the better the chances of earning a transaction fee reward. However, users can lose some of their cryptocurrency through slashing if they have used a piece of inaccurate information in the proposed blocks.

Cryptocurrencies to Stake

Nearly every cryptocurrency launched after 2017 offers some form of staking as the Proof-of-Stake has become the priority consensus method for cryptocurrencies

The cryptocurrencies like Bitcoin, Lite coin, and Dogecoin are not offering to stake but users can yield stablecoins. Here’s a list of the top coins offering to stake

·Solana (SOL)

·Cardano (ADA)

·Ethereum 2.0 (ETH)

·Avalanches (AVAX)

·Polkadot (DOT)

·Tera (LUNA)

·Binance Coin (BNB)

·Crypto.com (CRO)

·Cosmos (ATOM)

·Tezos (XTZ)

·EOS

Among the above-listed cryptocurrencies, Ethereum is the most popular with a market cap of about $210 billion. The recent transition to proof of stake means that anyone can participate in block production, simply by locking up some of Ethereum. But here’s the catch, you can currently stake ETH but you won't be able to withdraw any rewards until the launch of ETH 2.0.

How do you Stake Cryptocurrency?

It depends on the financial, technical, and research commitment you’re willing to make if you’re already doing a full-time job and looking for a passive income stream only. There are several ways to start staking but I’ve listed here a few methods that are safe for the first timers.

Your first decision is to choose if you want to delegate your computer to validate transactions or trust someone with your cryptocurrency for all the legwork.

Networks that support staking allow people who own tokens to provide them to other users on the blockchain networks for validating transactions. Thereby, earning a share from the reward.

·Using an Exchange Crypto

Staking platform enables users to generate stable earnings with minimal user participation required. But every investor should be savvy and educate themselves before buying any speculative asset.

Choosing an exchange is tricky; make sure to have enough information about the number of coins you can trade, competitive interest rate, commission charges, security controls, insurance policy, and sufficient liquidity.

oBest Exchanges That Offer to Stake

According to a review by Nerd wallet, Kraken, Coinbase, and Binance.US are acing in offering staking and reward programs. Others like Gemini and BlockFi, let a user earn additional crypto similar to staking.

·Joining a Pool

If you can’t find an exchange that supports the token you want to stake, you can join the staking pool operated by another user.

For this, you need to learn how to use the crypto wallet to connect your token with the validator’s pool. But make sure that your chosen pool has produced blocks, has 60% or less saturation, and has 24/7 availability of stake pool operator.

It is also better to check if the pool operator has ever been penalized for malpractices or mistakes.

·Becoming a Validator

Having your staking infrastructure can be a dream come true but it is complicated and expensive, and also, involves a high risk of failure for newbies. You’ll need proper computing equipment, and software along with enough crypto assets to pay high entry costs. However, it is sometimes better to start staking through a pool or an online service that does not carry such requirements.

Tips for Successful Crypto Staking in 2023

Here are a few tips and tricks to ensure successful crypto staking and generating passive income on a monthly, weekly, or even daily basis:-

·Find a cryptocurrency with high growth potential. Staking is only profitable if the network is growing and yields value. Ethereum has a recent transition from proof of work to proof of stake consensus. It is not only a helping environment but also allows users to stake their coins and earn a passive income stream just like deposits in a savings account, thus, it contains the potential to become the best crypto for staking in 2023.

·Do not invest in too many networks simultaneously. Staking is a long-term strategy, so it’s best to focus your efforts on one network at a time.

·Reinvest the rewards you earn through staking. That’s how staking is profitable-reinvesting to increase investment.

Staking Summary

Staking coins is worth investing in 2023. Although the concept of staking is not foreign to everyday crypto investors, yet, the finance market is volatile; always conduct thorough research before making any investment decisions. The more coins you stake, the more rewards you shall earn.

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