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Key points to remember

  • Crypto markets have seen a significant decline in recent months.
  • Even during a crypto winter, investors have the opportunity to make extra money.
  • Crypto staking is an option for investors to earn passive income, but only for cryptocurrencies that use a proof-of-stake consensus mechanism.

Crypto winter is upon us. In other words, a major bear market has hit crypto investors hard. As long-term investors know, bear markets are a natural part of the economic cycle. Although the crypto winter can be particularly difficult for crypto enthusiasts to watch, there are still ways to earn extra money from your crypto wallet.

Let’s explore what crypto-staking is. Plus, find out how you can use this strategy (and invest in crypto) to earn extra money during the crypto winter.

What is Crypto Staking?

At the most basic level, crypto staking is a way to earn passive income from your crypto holdings. As an investor, you may think of crypto staking as similar to earning interest or dividends on a more traditional investment.

So how does staking work? Essentially, crypto owners can authorize the use of their cryptocurrency to ensure the accuracy of other transactions on an underlying blockchain network.

Blockchains contain a record of past transactions made with a cryptocurrency, and this record must be agreed upon. Otherwise, investors would have no confidence in the currency’s legitimacy. Staking is an approach that some cryptos take to validate their blockchains, which leads users to participate in the approval and validation of transactions on the blockchain.

Of course, the back-end is relatively complicated. But as an investor, you don’t need to be involved in all the technical details. You will have several ways to do this:

  • Stake cryptocurrency through a crypto exchange: The exchange covers the technical aspects for you. In exchange for managing the back-end, the crypto exchange will take a cut of your profits.
  • Join a staking pool: This requires you to transfer your funds to a specific crypto wallet before proceeding with staking. Like the crypto exchange, a pool admin will manage the back-end and take part of your profits.

As you earn by staking crypto, you will receive your rewards in a predetermined cryptocurrency. With this, staking is a way to grow your crypto portfolio. But the downside of staking through a platform or pool is that part of the profit goes to the facilitator. Before going ahead with a particular option, shop around for a reasonable rate.

Benefits of crypto staking

As with all investment choices, there are pros and cons to staking crypto. Let’s start by exploring the benefits:

  • Passive Income: If you believe in the future-proofing of crypto, you can grow your crypto portfolio through passive investing. You won’t have to monitor validations of your crypto. Instead, the staking proceeds will appear as crypto in your wallet.
  • High yields possible: Investors looking for relatively high returns can likely find them through crypto staking. Although the exact amount you can earn varies depending on several factors, you will likely earn more from staking than you would from a crypto savings account.
  • The crypto exchange handles the process: Crypto staking relies on a complicated back-end system. But when you work through a crypto exchange, you essentially outsource all the complications. You can just sit back and enjoy the feedback.

Crypto Staking Risks

Crypto is a particularly volatile investment. If you go ahead with staking your crypto, there are risks you should be aware of. Here’s what you need to know before getting started:

  • Volatility: Crypto is a volatile asset. Through crypto staking, you will earn rewards in the form of crypto. Although you may have more cryptocurrency, the value of these assets can rise and fall dramatically over time. With this, your actual rewards might be less than expected.
  • Lack of liquidity: When staking crypto, you will need to lock funds for an extended period of time. The time commitment can range from a few days to a few months and in some cases may be a factor unknown to the investor. Throughout the staking period, most exchanges have a lock-up period. Before committing your funds, make sure you are comfortable with lock-up times. . If the price of your asset drops, you will have no chance of withdrawing your funds to sell them. Additionally, staking a relatively unknown coin could make it difficult to sell on major exchanges.
  • Possible loss of crypto: Crypto is an asset that seems particularly prone to theft, without many options for recourse. With this risk in mind, it is best to work with the most reputable platforms for crypto staking.

Which cryptocurrencies have staking opportunities?

When you dive into the world of cryptocurrency, you will find that there are hundreds of coins out there. If you are interested in staking opportunities, you will need to find cryptocurrencies that offer staking options.

Some of the cryptocurrencies that offer staking include Algorand, Ethereum, Tezos, Cosmos, Solana, and Cardano. The amount you can earn from staking varies by platform and cryptocurrency. For example, Coinbase offers staking opportunities for Ethereum with an APY offer of 4.00%. Coinbase’s best offer for staking is 5.75% APY when you stake Algorand.

Some of the cryptocurrencies that offer staking include Algorand, Ethereum, Tezos, Cosmos, Solana, and Cardano. The amount you can earn from staking varies by platform and cryptocurrency. For example, Coinbase offers staking opportunities for Ethereum with an APY offer of 4.00%. Coinbase’s best offer for staking is 5.75% APY when you stake Algorand.

Is Crypto Staking Right For You?

Crypto staking is a useful option for long-term crypto investors who are ready to prepare for a potentially long crypto winter ahead. You can put your crypto to work for you. If you don’t mind exiting the market in the short term, time commitments for crypto staking are unlikely to be a deterrent.

When considering your cryptocurrency staking opportunities, look for the best APYs. But consider the stability of crypto. Although a smaller crypto may offer a higher APY, there is also a higher risk of crypto tanking. Also, make sure you’re comfortable locking in your funds for an extended period of time before jumping in.

Crypto Investing Simplified

If you want to make your cryptocurrency work, crypto staking is an interesting opportunity. But crypto staking comes with risks that not all investors are comfortable with. For investors who prefer a different strategy, Crypto Kit could be the right decision. uses artificial intelligence to track market developments. As the markets change, will automatically make the necessary adjustments to your portfolio to keep your holdings in line with your goals and risk tolerance.

Since crypto markets are so volatile, harnessing the power of artificial intelligence is particularly appealing. Even if you like to stay on top of changes in the crypto world, can take some of the pressure off your commitment to portfolio management.

Download today to access AI-powered investment strategies.

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