With every passing week, more investors are making money from crypto. If you still think trading or investing in Bitcoin, ETH, or other coins is the only way to profit from the tokens you invest in, you are wrong. Trusting in the right validator can help you compound your assets and earn high yield rewards, helping you make more with crypto.
Staking crypto explained
Staking crypto is another way to earn from cryptocurrency. Unlike trading or investing, it’s easier to achieve rewards in staking. To put it simply, staking allows you to lend your coins to a developer to support the operations of a blockchain network. When you stake your crypto, it serves as insurance, and in exchange for letting a developer use it, you get extra coins as a reward.
You might have to wait for a certain period before you can take out your investment and rewards. The locked-in period is part of the staking process and can be one of the drawbacks for staking. Nevertheless, with the right moves and staking provider, you can grow your money passively.
Staking is profitable if done right. Although there are risks, you can certainly make money. The good thing with staking crypto is that it can turn into passive income, especially if you are able to spot the best staking crypto. Once you have enough knowledge about the best staking token, you can invest your assets and wait for your rewards to be released in due time.
How to make money through staking
The following steps ways for you to get started with making money through staking.
Step #1: Join a trustworthy validator
The first step in staking crypto is learning where to do it. Unlike buying and selling crypto, you can’t stake in any crypto platform unless it is designed for such an activity. In other words, they must be trustworthy validators to execute staking effectively.
Simply put, a blockchain validator is an entity that is responsible for verifying transactions on a blockchain. When blocks are forged, and transactions are verified, they are added to the distributed ledger. In conventional systems like Proof of Work (PoW), validators are also known as miners and aim to solve complex computational math problems to win the right to verify.
However, in Proof of Stake systems such as RockX, as long as contributors stake the network’s token and correctly participate in the network, the mechanism helps secure the network by locking up the tokens in-network and go through a consensus decision.
Step #2: Staking for rewards or participation?
When you enter the crypto staking world, you will have two options: stake for rewards or stake for participation. Both give a decent number of coins depending on your stake.
Staking for rewards allows you to stake your crypto, lend it to a developer, and wait for your rewards after the locked-in period. You don’t do anything when you stake for rewards as you are getting paid for putting your crypto as insurance.
On the other hand, Staking for participation is a unique experience for new and existing investors. Unlike staking for rewards, this alternative is challenging since you need to vote to appoint those who will manage the project. Your voting privilege would depend on how much stake you put in.
What gives higher rewards?
This question depends on how much stake you have. If you have more cryptos staking for rewards than participation, the former will give you better rewards.
Step #3: Initial capital and profit goal
The next step to make money staking crypto is knowing your initial capital and profit goal. How much are you willing to stake? How much do you want to take as your profit? This is an integral part of the process as it will determine how much money you should prepare when staking crypto.
Not every investor can meet the minimum of staking solo. This is the reason why a staking pool is more suitable for new investors who don’t have that much money to stake. For example, in order to stake in Ethereum 2.0, you need at least 32 ETH to get started, which is equivalent to $86,534 as of this writing.
But, if you join a staking pool, you won’t need that much. You can start with at least $100 depending on the minimum imposed by the DEX you entered. Your profit and rewards will depend on your goals.
Step #4: Know the locked-in period
Knowing about the locked-in period is crucial to staking reasonably. The locked-in period is basically the amount of time you are restricted from withdrawing your stake and rewards. During the locked-in period, no investors can pull out their investment. You have to wait for it to lapse before you can do anything you want with your stake.
For investors, this is essential to manage your finances well, mainly if you are relying on your crypto investments as a source of income. ETH coins have a locked-in period of up to 24 months.
Step #5: Diversify your crypto-investment
“Don’t put all your eggs in one basket.”
Any investor knows that putting all your money into a single investment is never the smartest way to go. If you want to protect your money from price volatility and inflation, you need to diversify your investment. Even if you are just investing in crypto, you have to put your money in different coins.
Remember that you are not limited to one coin when staking. You can stake Polkadot, Solana, and Oasis all at the same time. With diversification, you can minimize your staking risks and increase your chances of winning.
Staking crypto is becoming one of the top ways to generate passive income now that it’s getting more and more popular. With a suitable validator, you can be a successful investor even without expert knowledge about the crypto world.
If you are looking to making staking a source of income, just knowing about staking is not enough. Crypto staking will be done best when you are staking with the right provider, with a platform such as RockX makes staking easy. Learn to compound your crypto assets by staking the right way, where estimated yields are high, and profits are likely.