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Let Your Crypto Make Money Babysitting Blockchains
Staking cryptocurrencies has become a really hot trend for crypto investors lately. Why’s that? Well, it lets you earn sweet passive income on your coins while actually helping secure these new blockchain networks.
In this beginner’s guide, I’ll walk you through everything you need to know to start earning stacks through staking. We’ll look at:
- What staking actually means
- How the staking process works
- Major pros and cons to consider
So if you want to put your crypto to work instead of wasting away on some exchange account, buckle up! This guide has you covered.
When you hear “staking”, it basically means using your crypto as a validator on proof-of-stake (PoS) blockchains. Instead of intense crypto mining with hardware rigs, PoS systems allow everyday users to support operations by staking coins.
As a validator, you’ll help add new transaction blocks and verify activity is legit. The networks reward you for your help in newly minted coins — almost like interest payments!
Top projects like Cardano, Polkadot, Solana and Ethereum all run on PoS. This opens up a monster opportunity to earn staking yields on top cryptos.
By committing to lock up staked assets for a period, you provide critical decentralized security to keep these networks running smoothly. At the same time, you’ll earn very nicely along the way!
Staking revolves around everyday crypto owners participating as “validators” to help operate proof-of-stake blockchains.
Instead of fancy and expensive mining hardware, all you need is to lock up funds in a compatible wallet. This allows you to help validate transactions and add new network blocks.
The blockchain pays you back in newly minted tokens as a thank you for securing the system and verifying transfers. It’s almost like interest rewards for being a dedicated network supporter!
The basic steps go like this:
- Pick a PoS coin you want to stake
- Join a stake pool that provides the infrastructure
- Send coins to pool’s address to delegate stake
- The pool assigns you validator duties based on your stake
- Earn crypto rewards flowing back to your account!
So in a nutshell, you’re committing funds to act as a trustworthy validator, giving you a voice in network decisions. And governance power pays well!
Long term holders now have a killer option to make their dormant coins work for them.
We have learned what is staking in crypto and taken a surface level view of how the staking process works.
Next, we’ll dive deeper into the major pros and cons to weigh when deciding if putting your crypto to work through staking is right for your portfolio.
Staking cryptocurrency offers several meaningful benefits compared to traditional passive income options:
And those are some of the major advantages to taking advantage of crypto staking opportunities. Of course, it’s worth weighing some potential downsides too.
While staking unlocks new income potential, it does come with some trade-offs to factor in:
By now you should have a solid grasp of staking fundamentals and have evaluated the pros/cons to decide if they align with your investing strategy.
In this final section, let’s go through everything you need to know to get started staking cryptocurrencies as a beginner.
The first decision is choosing which cryptocurrency you want to stake — each will offer its own rewards rates, lockup times, and minimum staking amounts to be aware of.
Here are some leading staking cryptocurrencies to consider, from market cap leaders to newer emerging protocols:
Ethereum (ETH)
- High profile blockchain
- Attractive staking yields from 3–6%
- 32 ETH minimum to solo stake
- Staking pools allow participants to participate with less
Cardano (ADA)
- Built as eco-friendly proof-of-stake network
- Simple staking directly from Daedalus/Yoroi wallets
- Consistently yields 3–6% returns
Solana (SOL)
- Ultra fast, low cost blockchain built for scalability
- Staking from a wallet or picking a participating exchange
- Yields around 2–5% APY
Polkadot (DOT)
- Sharding blockchain focused on cross-chain bridges
- Nominate DOT directly or join active community staking pools
- Offers about 8–15% yields on staked DOT
Cosmos (ATOM)
- Facilitates seamless transfers between PoS blockchains
- Led by Tendermint validator network
The coins above just scratch the surface of diversity in the staking ecosystem. But they offer solid options to start optimizing staking yields on reputable networks.
Please Note: The APYs given are tentative and might change with market conditions and platforms used. Do not consider them as absolute rates, DYOR.
Real talk — unless you’ve got tens of thousands of dollars in crypto, running your own staking node just won’t make sense financially. The infrastructure is too complex and expensive!
Luckily, staking pools allow smaller players like us to team up by contributing funds to a shared node. With enough users pitching in, pools have the size needed to turn a profit. They take a cut of the returns as a fee, but you still earn nice yields on your stake. It’s a classic win-win!
With so many pools to pick from though, how do you find a reliable one? I’d watch for a few key things:
- Strong reputation — Check community reviews for high uptime and support.
- Juicy APYs — Compare around to maximize returns.
- Low fee structure — More profits for you, less platform fees.
- Easy to use — Clean UI with good reward statistics.
Do a little digging to find the right fit before committing your precious coins!
Software wallets give the smoothest experience for staking while letting you control private keys.
For beginners, I’d grab user-friendly options like Daedalus, Phantom, Keplr or the Polkadot.js browser extension — depending which coin you stake.
Pros can beef up security further using a hardware wallet like a Ledger Nano. One catch — you may pay tiny network fees moving funds on/off the device.
Either way, never lose that recovery phrase!
Here’s a quick step-by-step guide to going from account setup to earning staking yields:
Step 1: Download wallet app for your cryptocurrency
Step 2: Set up new account + seed phrase
Step 3: Transfer the crypto to your wallet address
(Ex. Buy DOT on Coinbase, withdraw to Polkadot.js wallet)
Learn how to set up a crypto wallet here
Step 4: Find desired staking validator
(Research options before picking best staking pool for your coin.)
Step 5: Delegate stake to validator’s address
(Follow wallet instructions to assign stake and start earning rewards)
And that’s the basic process to begin staking your crypto! Monitor and claim periodic reward payouts for compounding passive income.
Check out the 15 best crypto staking coin options for 2024 to start your staking journey
Staking really does open up some exciting new ways to maximize your crypto portfolio!
Even users with smaller holdings can directly participate while earning solid yields along the way.
Crypto staking lets your holdings make YOU some extra money rather than sitting ideal. And who couldn’t use a little extra passive income?
If you liked this article, make sure to follow @investingink here on Medium for more crypto insights!
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