Bittime - The world of crypto assets offers a variety of ways to make money. One that is currently popular is staking, which is a mechanism where crypto asset owners can lock up their ownership to help secure the blockchain network and get rewards in the form of new tokens. However, did you know that Ripple (XRP) , one of the leading crypto assets, does not support the staking feature natively?
This article discusses why staking XRP is not possible and the alternatives available for those of you who want to gain passive profits from XRP holdings.
Why Does Ripple (XRP) Staking Not Exist?
As of September 2023, Ripple does not yet have a built-in staking feature on their blockchain. The Ripple network does not use a proof-of-stake (PoS) consensus mechanism to validate transactions. Instead, Ripple uses a different consensus approach to verify transactions.
For those of you who are interested in earning passive income from Ripple (XRP), an option you can consider is lending XRP on a centralized exchange or lending platform. It is important to note that lending is different from staking.
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Staking vs Lending Ripple (XRP): Understanding the Difference
Both staking and lending are options for crypto asset owners to generate passive income. However, basically they have very different purposes and functions in a blockchain network.
Staking is the process of delegating crypto assets to a proof-of-stake blockchain to help validate network transactions. In return, participants or “stakers” are rewarded for contributing to securing the network and helping create new “blocks.” These rewards are earned over time in the form of staked native tokens. Staking is only possible on proof-of-stake blockchains such as Ethereum , Cardano, or Polkadot.
While XRP owners cannot stake their assets, they can still earn interest by lending their XRP holdings. Lending is very different from staking. In lending, you do not contribute to the security of the PoS network, but rather lend your crypto assets.
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Where to Get Rewards from Lending Ripple (XRP)?
You can earn rewards by lending XRP on various centralized exchanges such as Binance, Nexo, and Crypto.com. Through this service, the XRP you lend is usually used to provide liquidity on the platform. This liquidity can then be accessed by borrowers who provide assets as collateral.
These borrowers take out loans by borrowing against the collateral assets they deposit. In exchange for the loan, the borrower pays an annual percentage rate (APR) to token holders (i.e. lenders) who have added their XRP to the liquidity pool.
Choosing the Right XRP Lending Platform
- Don't be tempted by high APRs: When you lend your crypto, you will usually be offered an APR for your investment. Some lending platforms may offer very high APRs to attract investors, but these high APRs may be unrealistic and involve additional risks.
- Choose a lending platform with a good reputation: Look for a platform that has a liquid market.
Ripple (XRP) Lending Risks
By lending XRP, ownership of your assets will usually transfer to a third party, be it the platform itself or the borrower. This creates counterparty risk, where you are no longer the holder of your assets and you are relying on the other party to fulfill their obligations and not default on the contract.
Additionally, there is also a security risk to the protocol: the value of collateral assets for XRP could fall below the market value of the Ripple (XRP) being lent, which means there is a collateral risk. There is also the risk of unknown bugs in the Ripple Ledger protocol and XRP investments in general. Please remember that this is not a complete list of all potential risks associated with lending.
Conclusion
Even though XRP staking is not available natively, the opportunity to earn passive profits from owning Ripple (XRP) is still open through lending on a credible platform. Stay aware of the risks and do careful research before choosing a lending platform to minimize losses.
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How to Buy Ripple (XRP) on Bittime
You can buy and sell Ripple (XRP) in an easy and safe way via Bittime . Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappebti.
Ripple (XRP) is available on Bittime with the market pair XRP/IDR . To be able to buy XRP/IDR on Bittime, make sure you have registered and completed identity verification. Apart from that, also make sure that you have sufficient balance by depositing some funds into your wallet. For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application.
Learn the complete guide on how to buy Ripple (XRP) at Bittime.
Monitor the price chart movements of Ripple (XRP), Ethereum (ETH) , Solana (SOL) and other cryptos to find out today's crypto market trends in real-time on Bittime.
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DISCLAIMER: This article is informational in nature and is not an offer or solicitation 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.
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