What is cryptocurrency staking: exchanges, wallets, and staking currencies 💸

[Lord777]

Users who are just starting to understand cryptocurrencies think that you can earn money on crypto only by mining, trading or exchanging currencies.

Today we will talk about how to make money on storing cryptocurrencies — staking.

What is staking?​

Staking is a way to generate income from cryptocurrencies that are stored on the Proof of Stake (PoS) algorithm. The bottom line is that to make a profit, you just need to store crypto assets in your wallet. At the same time, the more coins a user stores, the higher the chance that they will be able to form a new block and receive a reward.

The PoS algorithm is used for cryptocurrencies such as TRON, Tezos, Solana, EOS, Cardano, Cosmos, and others.

How is staking different from mining?​

Mining runs on the Proof of Work (PoS) algorithm. To calculate each new block of the blockchain - a block that will store information about transactions made over a certain period of time — you need to solve special tasks. Accordingly, the higher the power of a particular miner or pool of miners, the higher the chances that it will be able to calculate the key for the next block — hash.

In the case of staking, you earn money by storing a certain number of coins and not performing any actions with them. The more coins you keep, the higher the chance that you will get the opportunity to form a new block.

Due to the fact that staking does not require calculations to create a new block, operations in PoS algorithms are faster.

For convenience, we have compiled a table where we briefly describe the differences between staking and mining:

Criteria	Proof of stake (forgers)	Proof of work(майнинг)
How new blocks are created in the blockchain	Thanks to coin storage	Thanks to its high hash rate
Who has a better chance of creating a new ad block?	Someone who keeps coins longer and longer	The more capacity, the higher the chance
Additional costs	No	Expenses for rent of premises, equipment and electricity
What technologies are needed	No extra charges. you don't need to spend money on technology	We need modern and powerful equipment

Types of staking ​

There are three key types of staking:

Fixed staking​

In English — Locked Betting. In this case, when placing coins, the user immediately indicates how long they are placing coins. Here, the analogy with a fixed-term bank deposit is well suited: you give money at a fixed interest rate and receive it back after a certain period of time.

Interest rates depend on the term, amount and type of coins that are placed for staking. Interest range: from 2 to 20% per year.

In case of early withdrawal of the amount, as with the bank, you may be partially or completely deprived of accrued interest.

Perpetual staking​

In English-Flexible Betting. This is a type of staking where you place money and can withdraw it at any time.

For this type of staking, an analogy with bank savings accounts is suitable. You put money on it, get interest, and you can get the entire amount of money back at any time. In this case, interest payments can be made once a month, or more often.

Due to the possibility to withdraw the amount at any time, the interest in such stacking is lower.

DeFi-staking​

This is a staking format in which you use a third party to make some transactions: credit users, insure them, etc. Such transactions are made using smart contracts.

In this case, you most often give your money to the platform so that it can dispose of it at its own discretion. For this, it can promise you a fixed return or dynamic profit, depending on the total amount of investment.

The main reason why Defi-staking attracts users: high profitability. For example, if on fixed and fixed-term contracts it often fluctuates in the range of 10-30%, then in Defi it can be hundreds of percent per annum.

What affects the profitability of staking ☝​

Staking conditions depend on a number of factors:

• Type of staking: Fixed, Perpetual, or Defi-staking;
• Where exactly it is placed. For example, interest rates of 200-300% per annum are more common on platforms with Defi-staking. Such conditions are associated with risks: potential hacking of accounts, unreliability of the custodian, etc.;
• What cryptocurrency is hosted;
• How much money do you want to invest;
• Your identity. The assessment is similar to how banks analyze their customers. Crypto exchanges can look at how and when you made transactions on the blockchain, thus they can build a model of your behavior: do you tend to keep assets for a long time or do you invest and then withdraw them quickly, is there a risk of fraud,

etc.

Staking risks​

Staking is a good tool for increasing your assets, but it is always important to take into account the risks of volatility and falling demand.

Due to the instability of the exchange rate and its dependence on many factors, long-term investments can pose a risk. For example, if the planning horizon for fiat currencies — the usual state — backed currencies-can be 5-10 years, then with cryptocurrencies they can be up to 6 months, provided that the strategy is regularly adjusted.

Moreover, the case with Tether (USDT) is an additional confirmation of this: recently this stablecoin fell to$ 0.95, although according to the developers, Tether is backed by US dollars in a ratio of 1 to 1.

Which crypto exchanges have staking ​

Below we have collected examples of exchanges that are often used for staking:

Binance.com​

This is one of the most reliable exchanges with a high level of service and security. Fixed and Defi staking is currently available on the platform. It is important to keep in mind that due to its large influence, Binance may not always make decisions in favor of its customers.

example, against the background of the situation in 2022, Russian users who stored funds with a nominal value of more than$ 10,000 on the exchange faced a functional restriction: they were forbidden to perform any operations other than withdrawing funds.

Coinbase​

Another popular and proven platform. However, Russian users are facing difficulties in working with because of the restrictions imposed in 2022. If it is important for you to work with this particular service. you will need detection browser. Read more about this below.

aSTAKE.IO​

A relatively new project that offers users attractive investment conditions. The minimum amount of staking investment is from$15.

Crypto.com​

Similar to Binance, this platform requires identification of your identity (KYC). Moreover, if transactions are made on this exchange, a commission will be charged for each transfer. If all these aspects do not frighten you, otherwise it is a convenient and reliable platform that has a lot of tools for generating income.

AQRu​

The platform works with both entire teams and individual users. At the time of publication of this article, the maximum rate on the platform is 7%. At the same time, you can earn money not only on staking, but also on the operations with cryptocurrencies themselves through the app.

eToro​

This is a platform from Israel that is gaining popularity among users. In addition to the possibility of staking, the platform basically has an attractive bonus program for regular traders and users.

The key drawback of the exchange is that only US dollars are available from fiat money on it.

How does staking work on the Binance platform ?​

The platform currently offers two staking options:

Fixed​

This is staking for a certain period of time with a fixed amount of payments. To use such staking on Binance, you need to select the currency, term and click "Add assets".

After that, the amount will not be displayed on the spot wallet for the specified period. In case of early withdrawal of money, you can lose interest, so it is better to transfer funds for a shorter period of time, and then extend them.

DeFI​

In this case, Binance acts as a conditional "fund" that manages the funds allocated by you on your behalf and implements them in selected projects. Further, the profit from investments is distributed among all participants depending on the amount of investments.

More detailed information about Defi-stacking on Binance should be read for specific tokens.

The best cryptocurrencies for staking ​

The choice of a coin largely depends on your investment strategy, financial capabilities, and how long you are willing to invest the currency. For example, for staking some cryptocurrencies, there is a requirement to deposit at least a certain amount. Because of this, this may become a limitation for some users.

Below we have collected the cryptocurrencies that users most often use for staking:

️Ethereum

Ethereum or Ether is one of the most popular cryptocurrencies. For staking this cryptocurrency, popular exchanges often offer up to 15%, in some cases the amount may be higher.

️Cardano

Since its introduction, this cryptocurrency has already increased in price almost 4.5 times. The yield is usually up to 12% per year.

️Tezos

Cryptocurrency is distributed on various exchanges and is very democratic. According to the developers, it is the investors and users who participate in staking that decide the fate of projects and make key decisions on development.

The yield of this cryptocurrency is about 5-6% per annum.

️Solana

One of the most popular and growing cryptocurrencies right now. For staking this cryptocurrency on exchanges offer about 7-10%.

️Polygon

Another fast-growing currency that has earned its users at least +350% per annum over the past year.

️Algorand

Cryptocurrency is interesting because it works according to a special algorithm — Pure Proof of Stake. Its special feature is that before creating a new ad block, the user is selected randomly.

In terms of profitability — you can earn up to 10% per annum on this cryptocurrency.

Using an anti-detection browser for staking ️​

For users of cryptocurrencies, anti-detect browser — a special program for replacing digital fingerprints - can solve a lot of problems:

Protect your data​

Given the increasing number of online payments, including those using cryptocurrencies, the number of cases of cyber fraud is constantly growing. Anti-detection browser can reliably protect your fingerprint — your computer, location, and browser data - to prevent fraudsters from figuring out who you are and accessing your assets through a vulnerable network.

Multiaccounting service​

To actively work with a particular exchange, users periodically create several accounts for themselves on the same platform. This is sometimes necessary:

• for security reasons,
• to participate in sales, for example, on Coinlist,
• to work with accounts from different countries, etc.

If you use the same device for different accounts, anti-fraud systems will see that the same person is trying to impersonate different people-and this is prohibited by the rules of crypto exchanges and platforms-and may block their access.

Anti-detection browser can solve all these problems. Moreover, if you don't need many accounts, you can limit free plan from one of the best anti — detection services at the moment - Dolphin{anty}. The only limitation of this tariff is that you can have no more than 10 browser profiles at a time, and the profiles themselves can't be shared with other users.