What is staking in crypto?

With the ever-increasing Crypto market, staking has become a popular method among investors to earn a profit on their coins without trading them. 

As many are searching about staking in crypto on Google, here’s an explainer on the same. 

What is staking in crypto?

Staking in crypto is similar to earning interest on our bank deposits. When an individual deposits funds in a savings account, the bank typically lends it out to others, and the account holder receives a very small portion of the interest earned from lending. 

Similarly, when crypto holders stake their assets, they participate in running the blockchain and maintaining its security. In return, they earn rewards that are calculated in percentage yields and are higher than the interest rate offered by the banks. 

Read | List of countries where cryptocurrency is banned

How does staking in crypto work?

Investors can stake a portion of their cryptocurrency holdings through a staking pool, provided that the coins they have allows staking. Staking-enabled cryptocurrencies employ the “proof-of-stake” methodology to ensure that all transactions are validated and safeguarded without the need for a bank or payment processor.

Which coins allow staking?

Cryptocurrencies that process payments using the ‘proof of stake’ model allow staking. This is an energy-efficient alternative to the original proof of work model that requires mining devices to solve mathematical problems.

Ethereum, Polkadot, and Cardano are some of the cryptocurrencies that allow staking.

Read | List of cryptocurrencies in the world

How can you stake in crypto?

The most convenient way to stake in crypto is using an exchange. If you have bought coins in an exchange, participate in its staking programme. As per the schedule provided by the exchange, the rewards will be sent to your account. 

Binance, Coinbase, AQRU, Crypto.com, Kraken, and Voyager are some of the exchanges that allow staking. 

Read | Public vs Private Cryptocurrency: How do cryptocurrencies work and what does the proposed Bill mean?