Cryptocurrency staking has become one of the hot topics in the talks about passive crypto yields. Around 20 cryptocurrencies are currently filling up a large chunk of the staking market, led by Cardano, Solano, and Ethereum 2.0.
It is making crypto-asset owners curious about crypto staking and how it can benefit them. Read more to know how staking works and how it can be advantageous to asset owners.
What Is Staking in Crypto?
Every minute, hundreds of cryptocurrency transactions take place digitally. Nowadays, most cryptocurrencies are supported using a blockchain network. The blockchain network is a digital ledger. It is responsible for recording every single transaction.
Every transaction block gets added to the blockchain after verification. Now, verification of transactions is completed by two models; proof-of-work (PoW) and proof-of-stake (PoS).
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Cryptocurrencies like Cardano, Ethereum, and Solana use the proof-of-stake model of block verification. In this, the asset owner will pledge coins to the staking pool. Then, assets will be used in verifying the transactions. And the owner/validator will get rewarded with new coins.
How Does It Work?
The working of the proof-of-stake model is quite simple. The crypto owners will stake their assets. The blockchain protocol will choose a validator/owner of the coins. The transactions will get verified, and the validator will get rewarded.
Those who stake more coins have more chances to get picked by protocol. When the transactions get verified, it adds a new block to the network, and new coins get minted. These coins are given to the validator. In most cases, minted coins are the same as staked cryptocurrency. It depends on the cryptocurrency you have pledged.
The steps of crypto staking are simple and are as follows.
- Buy cryptocurrency that works on the proof-of-stake verification model.
- Store the coins in a blockchain wallet.
- Find a reliable, safe, and low commission staking pool to join.
- Stake the crypto using the staking pool.
- Wait and earn interest and rewards.
Benefits Of Staking Crypto
Some of the benefits that you can reap from staking are:
- .Passive income: You can earn rewards by staking the crypto assets every time protocol chooses you as the validator. It can be a great way to earn passively from crypto assets.
- No risk: While staking, you are not giving up the ownership of the cryptocurrency assets. It means there is no risk of losing the coins from your wallet in the process of staking.
- Make blockchain strong: For a cryptocurrency to be safe and reliable. The blockchain network should be safe and well supported. By staking, you are verifying the transactions. These transactions make the blockchain efficient and secure.
- No mining device needed: Unlike the proof-of-work model, you don’t need any specialized mining device to verify the transactions.
- Eco-friendly: Mining is not that environment-friendly process. But, staking is an eco-friendly process that does not harm the environment.
Staking crypto is easy and safe when done through a reliable staking pool. You can withdraw the coins from the staking pool when needed. However, you should remember that some crypto has a staking lock period. You can withdraw the coins only after the lock period is over.
Cryptocurrency staking is a perfect way to earn passively from crypto assets. It is safe, reliable, and hassle-free. Simply, choose a cryptocurrency that works on the proof-of-stake model.