Staking for beginners | Everything you need to know about staking crypto

Staking crypto is one of the more common ways of generating passive income. Over the past few years we’ve seen a large number of Proof-Of-Stake (POS) blockchain projects being developed due to a huge demand for staking. Here is everything you need to know about staking for beginners!

Who invented staking?

Back in 2013 Sunny King created Peercoin, which was the first Proof-of-Stake, while still keeping Proof of Work as a concept. Two years later, Daniel Larimer created the adjusted version of PoS, which he named DPoS - Delegated Proof of Stake, which was first applied to Bitshares and was eventually adopted by more cryptocurrencies.

Who pays staking rewards?

Staking rewards are usually handed out from freshly minted coins. Depending on the coin you’re staking, rewards might be given in several ways. Most commonly, every time a block is added to the blockchain, new coins are minted and distributed as staking rewards to that block's validator, and then to the user staking their coins through the said validator.

Why can staking crypto be considered bad?

One of the most common risks associated with staking crypto is that some staking pools require users to lock their coins in the smart contract for a set amount of time - usually for several months. This means that even if the value of your coin starts to drop, you can’t simply pull your coins out and sell them before they get released from the contract.

Will staking rewards decrease?

In most blockchain projects with staking systems in place, the rewards tend to reduce over time. This is due to the fact that the APY for that staking pool is reduced in order to keep the rewards flowing for a longer period of time, as the supply of new coins being minted is always limited in the long run. A good example of this is for staking Cardano, which has the most amount of money out of all block chain projects locked in staking. Staking rewards for ADA have been decreasing since 2020, as they began at about 5.5% in August 2020 and are currently at about 4.62% APY.

Will staking replace mining

Staking won’t necessarily replace mining, as there are still projects that rely on mining out there, such as Bitcoin, Ethereum Classic, RavenCoin, Monero, ZCash and lots more. However, in the Case of Ethereum which is said to be finishing it’s infamous “Merge” and switching to Proof-of-Work in August 2022, mining will definitely be replaced with Staking.

Staking with Metamask

Metamask is one of the most commonly used cryptocurrency wallet apps out there, and you’ll be happy to know that it does support staking. In most cases you’ll need to connect your wallet to a platform that allows you to stake a certain coin - whether it is Ethereum, Polygon (MATIC), or any other coin that can be staked.

Once you’ve connected the wallet to the platform, select the number of coins you wish to stake and confirm the transaction on your Metamask wallet. In most cases, you’ll see an updated amount of coins in your wallet, as well as a “Staked Amount” on your wallet app or staking platform.

Staking with Trezor

Trezor is one of the most popular hardware wallets due to its unbreakable security features. Some platforms and coins support staking with Trezor, however, there is still a large number of projects that don’t support staking with hardware wallets, so make sure to DYOR and check if your desired staking platform supports Trezor.

The early Trezor One model does not directly support staking. What you can do, is link your Trezor Model T or Trezor One wallet to a staking pool or validator, or connect your Exodus wallet app and use it as a staking interface.

Staking with Lido

Lido is one of the preferred staking, and DeFi in general, platforms out there. It has a very nice and easy-to-use interface, which is why Lido is the Ethereum-based liquid staking solution for most people.

In the case of staking ETH on Lido, you need to connect your wallet and select the amount of ETH coins you want to stake. After the transaction is confirmed, you’ll see a “new” coin in your wallet - stETH, which just represents the amount of coins you’ve staked with Lido.

Lido allows users to stake any amount of Ethereum, while still having the ability to deploy your staked ETH coins across DeFi applications like Curve, Sushi, Yearn, and such.

Staking on Coinbase

The exchange Coinbase allows users to stake 5 coins - Ethereum , ADA, ALGO, Tezos and ATOM, with payouts ranging from daily payouts to quarterly payouts. If you’re eligible for staking and meet the minimum balance needed for the asset, you’ll be automatically opted in and begin earning rewards. According to Coinbase, rewards are impacted by the frequency of blocks produced by that cryptocurrency’s network, which means they may vary from time to time.

Staking on Binance

The platform BinanceDeFi Staking acts on behalf of users to participate in certain DeFi products, obtains and distributes realized earnings and helps users to participate in DeFi products with a single click. Staking on Binance is available for the following coins: BUSD, ETH, BTC, DYDX, AAVE, BNB, USDT, USDC, LINK, and a few others.

Great thing about staking on Binance is that your staking rewards are automatically accrued and your compounded coins are automatically staked, which means that you keep getting that sweet sweet compounded interest without having to do anything!

Staking on crypto.com

Crypto.com is perhaps on of the most commonly used mobile apps for trading coins - but did you know they also support staking? Through staking their native CRO coin, you can earn staking rewards which are given out in a variety of different coins. Most recently FITFI, BTC, ETH and other coins have been given out as rewards for staking CRO.

The Crypto.com desktop exchange also offers staking options, but not only for the CRO coin, but a variety of other coins, including several stablecoins with great APYs, such as USDT and USDC.

Staking on Kraken

Kraken is a great platform for staking a number of coins you won’t see offered in many other places, such as KAVA, DOT, MINA, TRON, and lots of other more common coins such as ETH, BTC, SOL, ALGO, and such.

In order to stake coins on the Kraken exchange, head up to the EARN section on their website, locate the staking pool for your desired staking pool, select the number of coins you wish to stake, and then wait for a couple of minutes as transactions on Kraken sometimes tend to lag a bit. But, worry not - as your investment is definitely safe with Kraken!

Staking on Ledger

Ledger lets you safely stake different coins directly through Ledger Live. Over 25 different coins can be staked using Ledger. Aside from being one of the safest pieces of hardware for cryptocurrencies, Ledger also has a very beautiful and easy to use interface, making it many people’s go-to choice when deciding which hardware wallet to get. If you’re looking for a solution to staking crypto with a hardware wallet, rest easy knowing that Ledger has you covered!

Staking on eToro

Staking with eToro is simple, secure, and very user friendly. Staking rewards are paid out to users on a monthly basis in the supported crypto assets, with no action at all required on the user's behalf.

eToro staking rewards are among the most generous in the market, from a minimum of 75% of the staking yield. eToro retains a small percentage of the yield as a fee, as well as to cover the various operational, technical, and legal costs involved with operating the eToro platform.

Written by Alex Trpovic and Martin Ratinaud

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