March 26, 2024

Table of content

Welcome back to part 3 of our staking course here at Cryptology. 

If you haven’t already be sure to check out the opening two parts to get to know staking a little more. 

In this third edition we will be covering the benefits of crypto staking and how it can become an additional income source for investors on the blockchain.

Enjoy!

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What Is Crypto staking?

Crypto staking is the act of locking up your crypto tokens to a network which in return generates you rewards.  Staking rewards can be reinvested or alternatively withdrawn into your portfolio. Staking uses the Proof of Stake consensus mechanism, the predecessor of Proof of Work.

Transactions are validated on a Proof of Stake network to generate the rewards. If in the event the wrong transactions are verified, staked crypto is used as collateral. Staking rewards can be cut in half or ‘slashed’ if malicious transactions are validated.

Staking crypto is classified as passive income. You lock up your crypto on a platform or from your wallet and then let the returns generate. 

Over the years it’s become a popular medium to earn more crypto. Ethereum’s ETH token is one of the most popular PoS tokens after the Ethereum 2.0 in 2022. 

You can stake many other tokens such as: 

  • SOL
  • GRT
  • KSM
  • DOT

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What are the benefits of crypto staking? 

Cryptocurrency staking has a number of benefits for investors. Since its official inception in 2013 with Peercoin, PoS and staking crypto is a force to be reckoned with.

Here are some of the top benefits associated with staking your crypto:

  1. Staking Rewards

Staking generates you crypto rewards which in the long term may prove valuable as prices fluctuate. Rewards from staking can be restaked or added into your portfolio to be cashed out. Overall the generation of such rewards are a great incentive and are one of the major benefits for choosing to stake your crypto.

  1. Network Security

Crypto that is staked is used to primarily ensure that the correct transactions and activity on a given network are validated. This in turn creates security for Proof of Stake networks like Ethereum, Solana and Polkadot.

  1. Community Driven

Joining a staking pool or setting up your own nodes are a great way to be a part of the wider crypto community. Staking crypto is one of the many fundamental parts of the experience which in turn opens up new doors for networking and meeting like minded investors.

  1. Passive Income Opportunities

Passive income is a big buzzword used in all of finance and luckily staking crypto opens this opportunity up. Earn rewards and increase your portfolio once you’re set up and let the passive income come in. The only time you have to lift a finger is if you want to end your bonding period or extend it!

  1. Low Energy Consumption

Proof of Stake, the consensus mechanism that allows staking to occur is incredibly efficient in the energy it uses to mine crypto. When compared specifically to Proof of Work that powers Bitcoin mining thousands of dollars are saved and a more meritocratic system is set up to generate rewards due to the amount being staked determining the output of staking rewards.

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What to look out for when crypto staking

Staking crypto is an important part of the blockchain experience. But if you’re new to this idea then there are some things you’ll want to look out for. This will help you have the smoothest experience possible and will hopefully maximize your staking rewards.

  1. Slashing

As mentioned above there is a thing known as slashing. This occurs in staking when validators validate the wrong transactions on a network. As a result those taking part have their staking rewards reduced, so be wary that your income may not always be the same for this reason!

  1. Price Volatility

Staking crypto doesn’t mean you can’t fall victim to price fluctuations. Cryptocurrencies have proven to be volatile in the past which can in turn affect your staking rewards once the period is over. Ensure you’re staking what you can afford to lose!

  1. Platform Security

Staking platforms such as Decentralized Exchanges can be prone to cyber attacks from bad actors. It’s recommended to always research the safety of a platform before staking and understand the precautions associated with them.

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How to start crypto staking

Staking is quite straightforward to get started with. If you are new to this then be sure to follow the steps to join Cryptology staking as it’s a user friendly option with some of the best APR rewards on the blockchain.

  1. Sign up to Cryptology exchange and follow the necessary steps to get set up.
  2. Once signed up, deposit the necessary crypto into your account. 
  3. Choose which coin you want to stake. On Cryptology you can stake Ethereum, Solana, Polkadot, Kusama and The Graph.
  4. It’s now time to sit back and collect your crypto rewards.
  5. Once you are happy with your earnings or you just want to remove your initial stake you can withdraw your assets any time after the unbonding period for your convenience.

Our staking services and platform can also be accessed via the CryptologyGO app!

If you have enjoyed this article on crypto staking and the benefits it brings, be sure to follow us on Twitter/X to keep in the loop. 

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! Disclaimer

The information provided in this article is for educational and informational purposes only and should not be construed as financial, tax, or legal advice or recommendation. Dealing with virtual currencies involves significant risks, including the potential loss of your investment. We strongly recommend you obtain independent professional advice before making any financial decisions. The products and services offered by Cryptology may not be suitable for all users and may not be available in certain countries or jurisdictions. The promotional materials do not guarantee any specific outcomes or profits from virtual trading. Past performance is not indicative of future results. It is important to read and understand the risks, which are explained in our Risk Disclosure Statement

Tom F.

Tom is one of the content managers here at Cryptology. While still fresh in his career he has been able to firmly place himself within the world of crypto and content creation, producing work for a number of publications including esports.net and The Times of Malta newspaper.