Staking crypto currencies. Is it worth it?

Staking, a super important term you need to know if you are getting into crypto.

As you know, crypto currency is all about creating a secure and reliable networks for you and me to transact. There are two types of algorithms that ensure this and different networks will use different mechanisms. There's Proof of Stake and there's Proof of Work.

The Bitcoin network is Proof of Work and networks like Tron (TRX), Vechain, Cardano (ADA) and DASH all use Proof of Stake. Although each have different network rules that apply. So let's understand what is staking.

Staking

Projects will often choose Proof is Stake over Proof of Work because it is easier to set up and the energy consumption is minimal.

Staking is essentially the method of securing and verifying transactions. Those that want to stake crypto will buy crypto currency and stake it which means you are holding or locking up the crypto depending on the network.

When you do this, you are essentially going into an agreement with the blockchain network. Generally speaking, the staker will approve and verify transactions, and in return the network provides a staking reward and the amount will differ from the network to network.

If the staker approves transactions that violate the network's rules, then they may lose some of their stake. But most of the time, this is all done automatically and so staking can be a good way to actually earn a passive income.

The specifics will depend on the network, networks which requires you to take more risk like having to actually lock away your coins will usually compensate better. An example of this is the Synthetix Network's SNX token.

At the time of writing this article, you can lock up SNX tokens and earn up to 27.13% interest.

Some networks will require you to stay online in order to receive your staking rewards like Cardano (ADA), for example.

At the time of creating this article, you can earn over 5% yearly interest by staking Cardano's ADA token.

Delegated Proof of Stake

But don't worry, you don't have to miss out on staking and earning those rewards if you can't stay online all day. You can actually delegate your coins to another party like a staking service - Delegated Proof of Stake (DPoS) - so that you can simply stake your coins and carry on without having to remain online yourself. This is the easiest method who stake opt for as it requires no technical knowledge or special equipment. This will cause a small fee, but staking service can validate transactions, do all the lag work and send the rewards directly to your wallet.

There are also Proof of Stake networks like VeChain and Algorand who distribute rewards for simply holding the coins with no locking period.

Keep this in mind

Proof of Stake is becoming increasingly popular, with networks like Ethereum preparing to move from Proof of Work to Proof of Stake. But it is important to know that staking is new, it is still very much in its experimental stage especially in comparison to Proof of Work, which has been around since Bitcoin's launch in 2009.

Most popular staking coins in 2020

We'll go from the lowest interest to the highest.

• VeChain and Neo add around a 1% yearly interest

• Ontology (ONT) at over 4%

• Tron (TRX) at 4.11%

• Cardano (ADA), Tezos and Algorand at over 5%

• Cosmos (ATOM) you can earn over 8% per year.

Personally recommended Staking Platforms

These are two of my most recommened platforms where you can Stake your crypto;

• Nexo - Lock your crypto and earn up to 12% APY in your idle funds.

• Blockfi - Earn up 8.6% APY in your crypto by staking it.

Do your own research (DYOR)

Keep in mind that in addition to earning crypto staking rewards, you are also exposed to the normal up and down price movements of holding these assests, so be sure to do as much as research as possible so you are fully aware of what you are getting into.

Lead Image from: switchain.com

Article by: @Ryryry143