What is Staking in Crypto?

Can you make cryptocurrency work for you and earn passive income? There are several ways you can try, but in this article, we will focus on “staking”. How does it work, and is it safe? What staking methods are there to try? Let’s find out!

What is Staking?

Staking is a popular way of generating benefits for holding specific cryptocurrencies, such as Ethereum (ETH), Solana (SOL), Tezos (XTZ), and many others. All of them use the same method of approving operations — the Proof-of-Stake (PoS) model — which relies on validators to check transactions and add new blocks to the blockchain. When you reserve — or “stake”— crypto assets that use PoS, validators are getting an increased chance to confirm transactions in decentralized networks, while you earn percentage-rate rewards at the same time.

How to Stake

Choose the validator

Perform a staking transaction

Receive rewards

Get back your stake

Staking cryptocurrencies directly through validators gives you more control over your stake because no middleman is involved in the process and you can stake assets to a validator of your choice. You are also more likely to receive maximum rewards.

Alternatively, if you don’t meet some staking amount requirements or simply don’t want to spend time looking for a reliable validator you can stake with the help of a trusted third party, like a crypto exchange or staking pool. But you should keep two important things in mind: first, pools and exchanges usually take a cut of your earnings, and second, these services could be compromised. Nevertheless, you should take a close look at the conditions being offered and opt for the staking option that fits your personal needs.