Staking is one of the most popular ways of earning passive income from crypto holdings, with a growing number of crypto investors using their tokens this way every single day. In this article, we’ll simply explain everything you need to know about crypto staking, its potential returns, as well as outline the specifics of staking tokens like ADA, ETH, and many more.
What is crypto staking and what are the benefits?
Crypto staking is the activity of locking up a set amount of crypto tokens on a blockchain via a smart contract as collateral to validate transactions. By adding liquidity to the network and aiding in the blockchain's ability to service transactions, all crypto staking investors are rewarded with an average rate of return (APY) on specific blockchains. Not all crypto tokens can be staked and earn rewards, but the ones that are designed to be staked have different rules and rewards baked into the blockchain's source code which cannot be changed or broken by any third party.
You can stake your crypto through a hardware wallet such as a Ledger Nano, a mobile app wallet or use an exchange to stake your tokens for you. Numerous cryptocurrencies can be staked, like Cardano (ADA), Ethereum (ETH), Avalanche (AVAX), and Solana (SOL) with a growing ecosystem of tokens adding the ability to stake and gain crypto rewards.
In any case, think of crypto staking as locking up the crypto that can work for you like a savings account.
The longer the lockup period, and the more funds you invest, often the higher returns you can expect. One such strategy crypto staking investors employ is compounding their crypto staking rewards into additional deposits, growing their crypto portfolio significantly over (read more: https://www.coinpass.com/en/blog/academy/what-is-crypto-staking)…
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