What is Staking? 

Staking is one popular way to make passive income from crypto. Staking is a process where you lock or

Staking is one popular way to make passive income from crypto. Staking is a process where you lock or hold your crypto assets in a digital wallet to support the security and operation of a proof-of-stake (PoS) based blockchain network. 

By staking, you will get rewards in the form of interest on the assets you lock.

How Does Staking Work?

To stake, you must own a token that supports proof-of-stake (PoS), such as Ethereum, Tezos, Solana, Cardano, and others. You can buy these tokens on crypto platforms such as Bittime. After that, you can send your tokens to a digital wallet that supports staking.

When you send tokens to a digital wallet, you are actually sending them to a smart contract that will lock your tokens for a certain period of time. While the token is locked, you will act as a validator or staker who helps validate transactions and create new blocks on the blockchain network.

In return, you will get a reward or reward in the form of the same token that you locked. The amount of reward you get depends on several factors, such as the number of tokens you lock, the duration of time you lock them, the network difficulty level, and the token inflation rate.

What are the Benefits and Risks of Staking?

Staking has several advantages, including:

• You can earn passive income from your crypto assets without having to sell them.
• You can support blockchain networks you trust and contribute to improving their security and decentralization.
• You can gain voting rights and influence in network decision-making, depending on the protocols you follow.

However, staking also has several risks, including:

• You must lock your assets for a certain period of time, which means you cannot access them or sell them when prices rise or fall.
• You may lose some or all of your assets if you violate network rules, such as going offline or betraying. This is referred to as slashing.
• You may be impacted by inflation or devaluation of the tokens you lock, depending on monetary policy and market demand.

How to Choose Tokens for Staking?

Before you choose a token for staking, there are several things you need to consider, such as:

• The annual rate of return ( APY ) offered by the token. APY is the percentage of rewards you earn in a year from staking.
• Risk and volatility of the token. You must understand the risk profile and price fluctuations of the token you choose. You should also pay attention to external factors that can affect the value of the token, such as regulation, competition, or innovation.
• The vision and mission of the project behind the token. You must know the goals and direction of the project you are supporting by staking. You should also study the team, community, and roadmap of the project.

Conclusion

Staking is an interesting way to earn passive income from crypto. By staking, you can support the blockchain networks you love and earn rewards from the assets you lock. 

However, you must also take into account the risks and opportunities that exist before you decide to stake. Always do research and due diligence before you invest in crypto.

Also read:

What is Liquid Staking?

Bittime Staking FAQs

How to stake?

USDT staking vs. Staking Other Cryptos: Which is More Profitable?

DISCLAIMER : This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.