Cryptocurrency — a word that is on the month of almost everyone in this digital era. Crypto is a virtual currency used as a medium of exchange to buy goods and services. The one reason for it is the numerous opportunities it gives even to someone new to the crypto space.
Now, investors, traders, and spectators know and believe crypto investing and trading can fetch some good cash. But only a few know that there is a different way also to make money from crypto.
Yes, you heard it right. As the crypto industry is growing, it is giving numerous ways to earn money. One of the most famous ones apart from crypto investing and trading is crypto staking.
Suppose you are busy in your life and want to make passive income or even enjoy an active income without investing much of your time. In that case, you must consider reading this article, as we will explain to you the ins and outs of crypto staking and how you can compound your money from it.
Investing & trading vs. staking
Before going into detail about staking, let us first understand the difference between all the essential ways to make money.
Crypto investing is a straightforward approach. Here you buy a crypto, keep it for a long time, and sell it when you are happy with the profit. Crypto investing is a smooth and relaxed task once you know which crypto will gain at a price in the future.
On the other hand, crypto trading is about making money from small and significant fluctuations in the price movement. Trading here is the riskiest and challenging job to carry as you will have to sit and analyze the market regularly.
Finally, talking about staking is a new technique to make more crypto. In crypto staking, you will put your crypto on lease to the decentralized platform, which will use it as a liquidity fund and give you some crypto in return as interest.
Crypto staking in detail
Understanding the whole staking program and how it works is very easy for anyone who knows how the banking system works.
Just like you keep your funds in the bank, and in return, the bank gives you interest. In the same way, a decentralized staking system needs you to put your owned crypto into their platform, and in return, you earn more coins.
Typically, staking requires establishing a staking wallet by connecting it to the decentralized staking maximizer while solely holding the coins. While in some instances, the process consists of adding or assigning funds to a staking pool. All you have to do is keep your coins on the exchange, and the system will automatically take care of all the technical requirements.
You will make more crypto as a reward because the system will leverage your staked crypto. Meaning the staking system will use your crypto to do some work, typically using it to validate the transactions or providing liquidity.
Examples of crypto staking platforms
AAVE
AAVE is a 100% decentralized finance system that allows a user to borrow and lend crypto. A user lends their crypto by keeping it in liquidity and gets interest returns on their staked amount. On the other hand, any user can borrow digital currencies from liquidity by a ‘flash loan’ technique.
AAVE is considered the biggest DeFi project in terms of total money staked in its liquidity pool. AAVE is one of those platforms wherein you can stake your crypto and make passive income sources.
AAVE has its token that is currently trading at $447. It is ranked 28 on CoinMarketCap with a total circulating supply of 12,949,455 AAVE coins.
PancakeSwap
PancakeSwap is another fantastic platform that crypto enthusiasts widely use for making passive income. PancakeSwap is a DeFi platform users use to exchange tokens and coins, providing liquidity like AAVE and farming and earning interest.
PancakeSwap utilizes an automated market maker design, signifying that liquidity pools are used instead of order books. A user can earn interest by providing liquidity to the pool.
PancakeSwap is a token called CAKE that is currently trading at $22. According to CoinMarketCap, CAKE is number 32, with a circulating supply of 210,388,645 CAKE coins.
Binance Earn
Binance is the world’s largest cryptocurrency exchange in the world. Over said this, it is obvious it has to have some opportunity to help its customer make a passive source of income.
Binance Earn is a segment of Binance that allows its users to make passive income by staking their coins. There are options from which you can choose, like earning from saving, staking, launch pool, BNB value, and ETH 2.0 staking.
You here can use any of these options and can make money. Binance is safe and trusted around the world. Binance also has its coin called BNB, which ranks number 3 on CoinMarketCap. It has a circulating supply of 168,137,036 BNB coins.
Pros and cons of staking
| Pros | Cons |
| Easy processCrypto staking is easy as you have to buy some crypto and connect your wallet to the desired staking platform to earn rewards. High return1-2% daily is prevalent in crypto staking programs; some platforms and their pools give 1000%-2000% return a year. Easy passive incomeStaking is the ultimate way of making a passive source of income. Even a novice with very little knowledge can make money using staking. | Affect due to hacksAs the whole staking concept is new, there are still chances it is prone to be hacked. Locking your assetSome crypto staking platforms will need you to lock your crypto for a month, three, or even more. Impermanent lossDue to the change of rates of your staked crypto, you might suffer an impermanent loss. The prices of your crypto might go down, and you won’t get the time to sell it at the right time. |
Final thoughts
Crypto staking is a marvelous way of making money. Comparing it with banks, you get very few returns while investing in crypto, and staking has the potential to make you rich if compounding is used.
The significant task here is to select the right coin to invest in to increase the value while saving money from staking it. It is vital to do your research, know the coin economics, and analyze the overall growth of the coin in the future.
Coins that have real-life usage are something that you can take into consideration.
