Crypto staking is one of the easiest ways to grow your cryptocurrency portfolio without daily trading. In a nutshell, staking is the process by which you lock your cryptocurrencies in a digital wallet to support the security and functioning of a blockchain network. In return, you receive rewards in the form of new coins. Staking is available on blockchains that use the Proof of Stake (PoS) consensus mechanism or its derivatives, such as Delegated Proof of Stake (DPoS). These consensus mechanisms are the sustainable and energy-efficient alternative to the Proof of Work (PoW) model used by Bitcoin.
Why staking?
Staking may seem intimidating at first glance, but it is one of the most affordable ways to earn passive income in the crypto world. Here are some benefits that appeal to users:
- Guaranteed Passive Income – Cryptocurrencies work for you and generate income without your active effort.
- You support the network – Through this process, you help the blockchain remain secure and run efficiently.
- Attractive reward rates – Some projects offer returns of 5%, 10% or even over 20%, depending on the cryptocurrency chosen.
- No complicated technology – You don’t need to set up expensive rigs like mining. All you need is a compatible digital wallet and the right cryptocurrencies.
- Accessible for everyone – You don’t need to be tech-savvy to get started. The process is simple and intuitive.
If you’re interested in generating passive income from cryptocurrencies, discover our complete guide: crypto staking and Ethereum price predictions: the complete guide to crypto passive income.
How does the process work?
Staking involves following a few simple steps. Here’s how to get started:
1. Choose a cryptocurrency that allows staking
Not all cryptocurrencies offer this option. Among the most popular projects compatible with this feature are Ethereum (ETH), Cardano (ADA), Solana (SOL) and Polkadot (DOT).
2. Choose the right staking method
There are two main ways of staking:
- Validators – You need to run an individual node on the network and have a sizable minimum repository. This is a more advanced variant.
- Delegated Staking – The simplest way, where you delegate your cryptocurrency to an existing validator. All you need to do is choose a trusted validator.
3. Set up a compatible digital wallet
A digital wallet is necessary to store your coins and staking. Wallets such as Metamask, Trust Wallet or Exodus are easy to set up and support staking. Learn more about digital wallets in the article: Cryptocurrency wallet: Ledger, the perfect solution for investors.
4. Process the transaction and finalize the process
Once you have the right cryptocurrency in your wallet, look for the staking option and finalize the process. It usually only takes a few clicks to get your coins staked.
5. Get the rewards
Rewards are distributed on a regular basis, usually daily, weekly or monthly, depending on the blockchain used. They are automatically added to your wallet.
Best platforms for staking
Here are some popular recommendations:
- Binance – Offers staking for dozens of cryptocurrencies and competitive yields.
- Coinbase – Perfect for beginners, offering clear guides.
- Users’ favorite wallets – Trust Wallet and Ledger offer staking functionality directly from your wallet.
Staking risks
Although staking is a relatively safe method of earning income, it’s important to be aware of some risks:
- Loss of cryptocurrency value – Prices can fluctuate significantly in the crypto market. Even if you receive rewards, the overall value of your portfolio may decrease.
- Locking funds – Some platforms or blockchain require you to lock your coins for a fixed period (e.g., 7 days, 30 days). During this time, you won’t be able to access your funds.
- Choosing the wrong validator – If the chosen validator is unreliable, you may lose some of your rewards or even delegated funds.
Do you have a favorite cryptocurrency you want to add to your investment portfolio for staking? You can find an up-to-date price by visiting our dedicated cryptocurrency price list page.