Staking is one of the ways that exist in the crypto market to invest in cryptocurrencies and obtain economic benefits. As you know, cryptocurrencies are virtual currencies that work on a chain of blocks (blockchain), and that use cryptographic encryption to guarantee their ownership and the integrity of transactions.
These digital assets may be prone to different practices to profit from them, including holding, staking, or cryptocurrency mining.
Staking is the process through which cryptocurrency holdings are delegated or locked in order to earn rewards. This involves acquiring a series of cryptocurrencies that the investor will keep in his digital portfolio or wallet to earn long-term rewards.
Defi staking platform development In other words, the user can obtain extra earnings by buying and keeping their cryptocurrencies locked in a wallet. Here holders (investors who prefer to store cryptocurrencies for long-term returns) use coins to add new blocks to the associated blockchain, and consequently receive a reward in the form of additional coins.
This concept is often confused with that of holding, which consists of acquiring and storing cryptocurrencies in a portfolio to trade with them in the long term. The main difference is that, in staking, the balances are blocked and the investor cannot use them freely, so that he can receive a certain annual interest for this practice.
Advantages of cryptocurrency staking
Cryptocurrency staking is an almost new concept, but it has brought with it a large number of advantages for all those crypto investors:
Obtaining economic benefits . Thanks to this method you can earn rewards just for keeping your cryptocurrencies in your wallet, which means that you can earn passive income without having to do practically any work.
Cope with market volatility. The cryptocurrency market is characterized by its high volatility. Since staking requires you to lock up your cryptocurrency, it can help prevent you from selling during market dips and can help you resist the temptation to make impulse purchases.
Secure the network. This method contributes exponentially to securing the network. So you are not only getting economic performance, but you are also securing the network on which you are working.
Many possibilities. One of the values of this practice is that it offers a wide range of investment possibilities. Staking can be done with a variety of different cryptocurrencies (Bitcoin, Ethereum, …), so you can choose the one that best suits your needs.
Staking process, how does it work?
The process until you get to receive the economic benefits through staking can be somewhat complex for those users who are just entering the crypto world, and for this reason we have seen fit to offer a small guide on how this process works.
Next, you need to buy the tokens of the cryptocurrency you want to make a profit from.
The next step is very important, and it is when the user must deposit all the tokens they have bought in the specific cryptocurrency wallet for staking. This will give the cryptocurrency wallet the ability to use the tokens you have acquired to validate transactions on the cryptocurrency blockchain.
Once this is done, the wallet will reward you with a small amount of the value of the cryptocurrency with which you are staking.
And ready! Now be patient, because all that remains is to wait for your rewards to arrive.
Things you need to know before staking :
defi staking platform development company It is necessary that any user who wants to participate in the cryptocurrency staking process, take into account a series of characteristics before launching to invest.
Cryptocurrencies can be used to earn a return on invested capital.
A minimum amount of cryptocurrency is required to participate.
Participants can delegate their participation to others.
Cryptocurrencies can be held in a personal wallet or with an escrow service.
Participants receive rewards based on the amount of cryptocurrency they own and how long they hold it.
Rewards are paid in the same cryptocurrency used to participate.