Staking cryptocurrencies – what is it

Staking cryptocurrencies – what is it

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Staking Cryptocurrencies are one of the passive ways to make money. Staking is suitable for both experienced market players and beginners. The principle is to rent the cryptocurrency to the exchange or individual users for a fee in the form of interest.

Stacking cryptocurrencies : what is it , how does it work

In simple words, staking in cryptocurrency is the storage of cryptocurrency , for which the owner receives interest. Staking uses the PoS algorithm ( Proof of Stake ). PoS is a proof of stake in a digital asset, one of the methods to protect blockchain technology from hacking and inaccurate data. The PoS principle works like this: the larger the amount blocked on the owner’s account, the more blocks of the token are generated. Cryptocurrency staking is a full -fledged alternative to mining , which does not require special expensive equipment and the ability to mine cryptocurrencies. PoS is used in Solana , TRON, Tezos , Cardano , DASH and other coin generation.

Cryptocurrency exchanges and large platforms offer users staking services to maintain the stability, security and performance of the blockchain , and users get the opportunity to earn without making any effort.

What is fixed, perpetual and DeFi staking in cryptocurrency ?

Understanding what is staking in cryptocurrency is easy if you know how a bank deposit works. The owner of the asset allows the platform to block it for a time without the possibility of using it, for which he is charged interest. The larger the amount you are willing to freeze, the higher the profit.

We explained what staking is cryptocurrencies , but you need to understand its types. There are several of them:

  • Fixed _ Staking ). The owner indicates in advance the duration of the blocking of the crypt on the account. Having chosen a suitable period, the asset owner cannot change it. Interest in this case is fixed, the rate ranges from 2 to 20%.

  • Perpetual ( Flexible Staking ). The owner of the coin does not need to specify the blocking period, he can withdraw funds at any time – interest is charged as long as the tokens are not withdrawn or put up for sale. As a rule, interest can be received once a month.

  • DeFi staking . DeFi are decentralized services that operate on the basis of blockchain technology . Unlike fixed or perpetual staking , DeFi staking involves third parties, companies or private users who receive an asset on credit, and the exchange also pays interest to the owner. DeFi staking users can withdraw interest within a day, and the reward for storing cryptocurrency is accrued daily.

The profitability of staking depends on the digital asset that is blocked on the account, the amount, the duration of the token freeze , the type of staking itself and the trading platform. Some projects offer rewards only to individual validators who hold large amounts in their account. Sometimes users combine their assets into one amount, and the received reward is divided among themselves.

How to start making money on staking

To start earning on staking , you need to accumulate a digital asset and choose a platform for its placement. Platforms offer different terms and conditions, be sure to check them out. For greater profitability, you should use several different tokens – this way you reduce the risk of losses in case one coin falls in price, and increase the chances of making good money.

earn on staking with the help of the popular exchange Binance , it offers two options – fixed staking and DeFi . For example, to earn money on a fixed staking , you need to select a coin and the amount to be blocked, the freeze period on the exchange account and confirm the operation. The system will block the amount you specified, for the period of blocking the coin will disappear from the list of your asset, and it cannot be used for other types of earnings on the exchange. Interest is calculated every day.

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