Passive income means earning extra money from investments, real estate, or any other side business where you don’t have to work full time on a daily basis. Cryptocurrencies are also seen as a great way of passive income, especially if we talk about proof-of-stake tokens. However, the crypto market’s constant volitation is associated with high risks. If you have decided to earn extra money from crypto staking, follow our tips.
What Is Crypto Staking?
Crypto staking is the process of verifying cryptocurrency transactions. It involves pledging shares to support the blockchain network and confirm transactions. It also allows participants to earn passive income from their holdings.
If the tokens you hold allow staking, you can stake some cryptocurrencies and earn passive income. This is done through a staking pool, which can be likened to an interest-bearing savings account. Just like a savings account, you can earn between 5% and 20% annually on the amount of cryptocurrency you wager.
Why you should be rewarded, you might be wondering. That’s because the blockchain makes your holdings work. They will use a consensus mechanism called Proof-of-Stake to verify and secure all transactions. At the same time, if you have staked, your cryptocurrency will also be part of the process. Cryptocurrencies such as Solana, Polkadot, Ether, and Cardano currently allow staking.
How To Make Passive Income From Crypto Staking?
Not every cryptocurrency tokens use a proof-of-stake protocol. So, the first thing you will need to do obviously is to find and choose proof-of-stake crypto.
The next step is to know the minimum amount of crypto you need for staking.
After that, you can create a crypto wallet and offer your coins for a staking pool. The longer you hold your tokens in a staking pool and the higher the price gets, the higher the awards you get, meaning the more passive income you earn.
Risks Of Staking Cryptocurrency
Is Crypto Staking Risky? You bet there is. First, given the volatility of cryptocurrencies, your staked tokens may fall. Also, if you are a day trader, you may miss out on lucrative bets as you will be out of the coin for weeks to months. However, the cryptocurrency market is a popular investment source. If you are sure of your decision, you can definitely try crypto staking practice to earn extra passive income.