ᐅ Cryptocurrency Staking: What It Is ⚡ How to Earn

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Staking - What Is It in Cryptocurrencies?

Staking - What Is It in Cryptocurrencies?

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Staking is a form of passive income that replaces mining for coins based on the Proof-of-Stake algorithm. To engage in staking, you only need to hold coins, making it very similar to a regular bank deposit. A reward is accrued for holding, usually in the same cryptocurrency.

Staking replaces mining because holding coins ensures the execution of operations in their blockchain network, for which users receive a reward. Staking doesn't require owning significant computing power, buying ASICs or graphics cards - this makes it much more environmentally friendly and energy-efficient.

Locking coins during staking, besides being used in the network as validators, also provides protection against inflation: since coins are held in the network, it helps maintain the balance of supply and demand. Staking is becoming increasingly popular, including among institutional investors: some companies invest significant amounts in altcoins such as Cardano or Solana to earn income from staking.

There are several types of staking:

Fixed - when choosing this option, coins will be locked in the account for a specific period. You can withdraw them earlier - usually, the return is processed within a day, but if you resort to this, all accrued interest during the lock-up period will simply burn, so you'll get back the same number of coins you invested.
Flexible - you can hold coins in the account for as long as you want and withdraw at any time without losing interest. However, rates for flexible staking are usually significantly lower than for fixed staking.
DeFi staking - lending through smart contracts. The coin owner provides them as a loan and receives interest in return. It combines high profitability with guaranteed payments, as the lender is protected by a smart contract, as well as the platform through which the transaction is conducted.

Staking is a simple way to earn money, requiring very little time and nothing else. Although it can't be said that it's completely risk-free: the main risk is associated with volatility, as staking deprives you of the ability to quickly sell a falling cryptocurrency.