Pro tips to make money by staking crypto

Riding on a multi-billion dollar industry, crypto staking has been making giant strides since the past one year and so. As of July 2022, the market value of crypto staking is around $18 billion. The astronomical growth in crypto staking has left crypto investors wondering whether it is actually possible to make money by staking crypto. Well, in one word- Yes. The major draw behind the rising popularity of cryptocurrency staking is the lucrative opportunity to earn handy passive income from existing crypto holdings. Read more

The post below sheds light on how do stakers make money by staking crypto. Also, you will find expert tips on how to earn big through crypto staking.

How does crypto staking work?

When the discussion is about how to make money by staking crypto, you have to gather a basic understanding of the whole process of crypto staking. First things first, crypto staking is exclusively restricted for PoS coins- the cryptocurrencies that are developed on blockchains backed by Proof-of-Stake consensus mechanism.

PoS, staking, and staking rewards

The PoS consensus mechanism adds new blocks and mints new coins through the process of staking. In staking, crypto stakers deposit part of their crypto holdings to the PoS blockchain to help in verification of transaction data on a new block. The blockchain needs to verify every new block before adding it to the existing chain. As crypto stakers pledge their coins to help the blockchain in validating new blocks, the blockchain rewards them with new tokens. The tokens offered as rewards are called “crypto staking rewards”. This is the basic way to make money by staking crypto.

It’s to stress here that when the staker acts as validator and pledges his/her crypto holdings to the blockchains, the coins are locked-in for a certain period of time. Usually, it’s not possible to withdraw the frozen coins before the end of the staking period.

You should also know that a staker’s opportunity to make money by staking crypto depends largely on the blockchain. The blockchain network will choose the validator randomly; there is generally no set pattern for the selection. However, a larger volume of staking enhances the likelihood of your selection as a validator and the opportunity to make money by staking crypto.

Tips to earn good money by staking crypto

How much money would you be able to earn by staking crypto? Well, the value of your earning here is broadly dependent on two factors- the percentage of staking reward and the price of the coin you have invested in to make money by staking crypto.

For example, some of the coins might offer 1000%+ APY on staking rewards. While these coins appear to be highly lucrative options when you are aimed to make money by staking crypto, the reality could be different. A big bunch of crypto coins rise mostly on hype. They might show a jaw-dropping rate of surge initially but might hit rock-bottom only after a few months. In that case, even a dramatic 1000%+ APY on their staking rewards might reduce to nothingness.

Below is a brief on expert tips that will help you to successfully make money by staking crypto.

Be mindful with coin selection

Taking cues from the discussion above, it can be safely claimed that a higher percentage of staking rewards should not be the sole criterion when you wish to make money by staking crypto.

Rather, when you want to make money by staking crypto, go for coins that are able to promise a sustainable future. They might show less APY on staking rewards compared to many other coins – but they are likely to thrive and provide substantial value to your staking rewards in the long-run.

When you aim to make money by staking crypto, you should know that blue-chip coins generally offer lower APY than many new altcoins, Despite comparatively lower APY, smart stakers prefer to bank on blue-chip coins mostly as they command a more stable future and hence are likely to assure genuine returns for the stakers. There are 3 factors that you should keep in mind while choosing a coin to make money by staking crypto.

● Strong fundamentals and potential of growth in the coming years

● Crypto with a purpose

● Fixed supply

Lengthy locking period

Longer you are ready to wait, the better would be your chances to make money by staking crypto.

As mentioned previously, when you pledge your crypto holdings to make money by staking crypto, your coins are locked for a certain period of time. Now, some crypto staking platforms do allow flexible staking where you can withdraw the coins before the lock-in period deadline. But, the flexibility quotient comes at the cost of rewards. In other words, stakers who opt for flexible staking receive reduced rewards compared to that offered by locked staking. So, you will increase your chance to make money by staking crypto if you opt for locked staking.

Staking platform with higher APY

This is another extremely important point when you aim to make money by staking crypto.

If you are new to the staking game, not all staking platforms offer equal APY on staking rewards of the same coin. Thus, when you wish to make money by staking crypto, look for a staking platform that offers reasonably high APY in staking rewards. Don’t forget to check the commission part as well. Just imagine how little you will make if almost half of the staking reward is wasted in paying commission to the staking platform.

When you want to make money by staking crypto, make sure the staking platform does not charge any staking fee. If the platform charges commission, it should be reasonably competitive.

Final words

There are different types of crypto staking platforms when you aim to make money by staking crypto. The most popular ones are crypto exchanges. Then, you have Staking-as-a-Service platforms that are especially designed for crypto staking. You also have crypto staking pools that offer a more economical avenue to take part in crypto staking.