Who said the only way to get crypto without buying it was mining? The stakeclosing gaps is another way to gain weight wallet. Obviously, mining brings more benefits, but the lesser need for resources is a point in its favor stake.
In technical terms, stake It’s also much easier to do. It’s also easier to understand; at least superficially.
What is that stake cryptocurrencies?
Staking involves holding cryptocurrencies in a wallet in exchange for rewards in the form of more cryptocurrencies. This process responds to the need to increase transaction security and strengthen blockchain networks.
That’s why you get rewards. Give back to the community by forgoing the use of crypto, either by locking it up in your own wallet or on an exchange. It is done? Not really, because not all cryptos lend themselves to it stake. Reason: type of network and protocol used to validate the blocks.
How does staking work?
Without going too far, we can differentiate between two types of consensus: Proof of Work (PoW) and Proof of Stake (PoS). In the first case, we have cryptos that depend on mining to exist. The most obvious example is Bitcoin, which you can’t do with stake.
In reality, no cryptography based on «proof of work» can do stake. Only cryptocurrencies whose networks reduce the computational cost by allowing users to validate blocks themselves.
The PoS randomly assigns the ability to validate, although in most cases the probability of being chosen as a validator depends on the blocked funds. The more units you block, the more chances you have of getting rewards for yourself stake.
What is DPoS?
Consensus PoS has a version known as Delegated Proof of Stake (DPoS). This validation method is based on user votes. As in PoS, the size of the blocked funds is directly proportional to the voting power.
Voting is used to elect delegates who guarantee the security and stability of the network. In addition, delegates must commit to sharing the benefits of their work with constituents.
how to start doing stake?
From the start, there are no restrictions to be made stake. If you have «crypto PoS» in your wallet or on the account of a stock exchange that offers this service from which you can benefit stake. Of course, you must block a minimum of units.
Here the question is a bit complicated. if you want to do it stake by yourself with ETH2 (yes, after upgrading the Ethereum network, it can be done stake with Buterin’s crypto), prepare your wallet: you will need at least 32 ETH.
You will also need to know what stake at the technical level, with all the security implications that entails. Of course, you must also have a device connected to the network.
Finally, you must cooperate by validating the transactions to receive the rewards. Fortunately, more and more exchanges offer trading services. stake its users. This simplifies everything, although it does not mean that we can completely ignore ourselves and devote ourselves to receiving cryptos without further ado.
Later we will see the risks and benefits associated with stakebut first it would be interesting if we talked about the types of stake who exist :
- swimming pools stake. The staking pools they are groups of holders who share resources to maximize their benefits. By teaming up, cryptocurrency owners increase the chances of completing more transactions. The main advantage of this type of stake is the independence of exchanges. The downside: you can’t always trust everyone or keep up with the group in terms of resources and experience.
- stake «cold». If you want to go it alone, you can pledge to do it cold parking. You only need a non-internet connected wallet. The advantage is obvious: all the rewards are for you. The downside: there are a lot of technical and security issues you need to resolve to get rewards.
- Suppliers of stake. I have already mentioned exchanges as a means of making stake In a simple way. Thanks to this option, we find simplicity. We all want them to make our lives easier. The problem is that in exchange for simplicity, you pay for security.
Steps to follow stake in an exchange
Do stake on an exchange is the less secure alternative, but is preferred by most users. This is understandable because it is part of the process of stake you have already covered it when buying cryptos on the platform.
In fact, this is the first step to take: buy a minimum of PoS crypto. If you are making your purchase outside of a P2P space, you will simply need to deposit your cryptos into the exchange you have chosen to stake.
You must do stake with your crypto-currencies?
Do stake or it’s not a personal decision. As a general rule, freezing some of your funds is usually associated with a commitment to the community. You may also be a long-term holder and want to take advantage of this opportunity.
The benefits of doing stake
Why would you want to have a bunch of cryptocurrencies in storage like that? The stake It allows you to generate profits from capital that you will not use. Why not block it and get rewards?
Beyond personal benefits, other benefits of stake These are the energy savings that this implies on PoW networks. In purely economic terms, it is much more profitable to do stake for me, mainly for a question of resource investment.
Disadvantages of doing stake
But it’s not all rosy when we do it stake. When we lock our crypto, we do so for a specific period of time. We have to weigh the possibility of lower prices in a scenario that does not allow us to move our capital.
It is advisable to read the terms stake, especially when there is a mediating exchange. In this sense, it is appropriate to also calculate the percentage of return that it offers, since it may not be suitable for us because it is too small.
Of course, the one stake on trading platforms carry additional risks. The main thing is that the exchange suffers a cyberattack and our funds disappear while we do it stake.
I can do stake with a cryptocurrency?
It can’t be done stake all cryptocurrencies. Only PoS consensus-based cryptos allow you to stake and enjoy passively. This effectively excludes BTC, but we have very juicy options like Cardano (ADA), Solana (SOL), Polkadot (DOT), and Ethereum (ETH2.0).
Cardano is a decentralized network that allows stake and delegate. Compliant project calculator, an annual return of slightly more than 4.6% can be generated. That is, for every 10,000 ADA delegates, just over 460.8 ADAs are obtained.
In case of mutual fund, the percentage is significantly higher. Again, for every 10,000 ADA, an annual cost of almost 25 ADA is applied and gives an approximate reward of 771.85% each year.
Solana’s network uses consensus PoS with a protocol designed by Yakovenko, which appears in his white paper: Proof of History (PoH). Transactions are fast and fees are low.
what would you say stake in Solana, there are hundreds of validators you can delegate your cryptos to. Average annual rewards are between 7% and 11% (depending on how much you trade or wallet used), which is not bad at all.
Ethereum (ETH 2.0)
Since the update of the Buterin network, it is possible to make stake with ETH 2.0. Due to its extreme popularity, Ethereum networks are considered in the networks as one of the best options for stake.
The decision must be personal. For starters, not everyone has 32 ETH to close it. That’s nearly $93,000 (according to price at the end of March), and this amount is minimal to make stake with Etherum.
On the other hand, the migration process is not yet an absolute reality, and the estimated reward percentage for stake ETH 2.0 will be around 8% per year. We are talking about a maximum of 21%, but that remains to be seen.
if we want to do stake with a slightly lower amount we can appeal to the project of one of the co-founders of Ethereum. in March) . 20).
The only downside is that if you want to control a node to validate blocks, the contribution multiplies quite a bit, reaching 350 POINTS. Beyond these figures, Polkadot is presented as one of the best networks to do stake with a reward of 14% per year.