With staking, all you have to do is hold cryptocurrencies in a wallet in order to be compensated by the network and thus earn passive income.
If you are interested in blockchain technology and cryptocurrencies, you have probably heard about mining.
Cryptocurrency mining is the activity whereby numerous servers (miners) lend their computing power to the network in order to validate and secure transactions. In exchange, miners receive a reward in Bitcoins.
We invite you to read this article which explains in detail what bitcoin mining is really all about:
Learn : What is Bitcoin Mining?
This time we’re going to teach you about staking or one of the types of crypto investments.
We’re going to explain how you can get great returns by investing in blockchain and cryptocurrency projects.
But what is staking?
Staking is a verb taken from the English language that would literally mean “to bet”. So, in a literal interpretation, staking would be the act of betting your tokens to support the growth of a project.
With staking, all you have to do is hold cryptocurrencies in a wallet in order to be compensated by the network and thus earn passive income.
Simply put, staking is the act of immobilizing your cryptos in a smart contract in order to participate in the operations that take place on a blockchain. Staking is similar to mining in the sense that they reward users for participating in the security of a decentralized network. This way, you’ll be storing your crypto while receiving benefits.
In other words, the investor or player who puts money “in staking” is a stakeholder in an investment or bet. He is betting in the hope of a financial return greater than the risk taken.
An influence on prices
In crypto, there are some blockchain projects that use Proof of Stake to validate transactions made on the network, in the same way that the… Bitcoin miners -or other proof of work networks- use ASICs or video cards to generate the computational work that creates the blocks, also validating the transactions.
It’s a different way to get a similar result and it works very well for these blockchains.
To participate in Proof of Stake, the “stakeholder” does not need to buy expensive machines and spend energy, but simply wager the assets they have in their wallet, showing the network that they are interested in this project and are willing to “put something on the line.” A widely used term is “skin in the game,” meaning the investor puts their “own skin in the game,” demonstrating how much they believe in the project.
Just as mining can generate profits for miners by creating new coins, in an inflation-controlled system, staking allows investors to receive a proportionate share of the “in-game” money invested in the network.
The more “skin in the game” investors put in, the lower the net income for the other participants, as the benefits are diluted among all stakeholders, but don’t think that’s a bad thing!
More people staking means more decentralization and distribution of votes in the network, which contributes to security. If the network becomes more secure, it also becomes more valuable in the eyes of the market, which can influence price increases in the long run, to the benefit of all investors.
Unlike the staking of many exchanges and other service providers, your coins are not locked in when you stake from your own wallet and the project’s blockchain network. This way, the customer remains free to move their funds with full liquidity at any time, while receiving commensurate returns.
How do you stake?
Due to the growing popularity of staking, the platforms that offer this activity are multiplying. Nevertheless, the more players there are, the greater the risk of scams. Indeed, you must choose the platform on which you are going to stake your assets in a careful way.
Behind promises of huge returns may be a scam.
In many applications, it is possible to buy assets on proof-of-stake networks and become a “stakeholder” with a few taps on the smartphone screen. With an automatic staking tool, if the blockchain of the token you are investing in allows for this option, your wallet will receive returns proportional to the current balance.
Just like on the famous Binance platform.
Among the various exchange platforms that offer you staking, Binance is probably the best known. Binance is a crypto-exchange platform founded in 2017 by Changpang Zhao, a Chinese developer. As of 2021, it is the largest platform in terms of daily crypto-currency trading volumes. Binance is present in more than 180 countries and claims more than 13 million active users which makes it a trusted platform to start staking.
How does staking work on Binance?
To start staking crypto on Binance, you must first create an account. To do this, nothing could be easier, just go to this address. Then click on the “Register” button. First of all, you should know that creating an account on Binance is totally free. All you have to do is enter your email address and choose a password.
Note that you can also do this with your cell phone number. A verification email is then sent to you to validate your account. Once this is done, go to the “Earn” section and click on “Staking” as shown below.
Some tokens offer annual staking returns (and approximate amounts, depending on how often new coins are issued in each token):
- Solana (SOL): 5.8% per year.
- Avalanche (AVAX): 9.4% per year
- Polkadot (DOT): 13.9% per year.
- LooksRare (LOOK): 49.64% per year.
- Pancakeswap (CAKE): 85% per year
What do you think about staking? Are you interested in? If yes, feel free to open a Binance account at https://accounts.binance.com/en/register?ref=LX1A9S03
