Staking is a mechanism that rewards users for locking up their coins or tokens for a period of time, thereby ensuring the security of the network and validating transactions. Simply put, crypto staking is the same mining, only here you don’t need special equipment, it will be enough to have coins that you are ready to say goodbye to for a while. The longer this period is, the greater the percentage of remuneration you will have. The reward means coins, that is, what coin was sent to the stack – the same one you get. With the help of staking on Emirex, holders of cryptoassets can passively earn without taking their assets out of the exchange.
Benefits and risks of staking cryptocurrencies
From the attractive returns, it becomes clear why staking has become so popular among cryptocurrency holders, as it gives them additional income from the assets held in their accounts. In addition, with examples of stunning 100% returns on some protocols, staking has firmly established its place in the world of cryptocurrencies. However, before diving into the world of staking, it’s worth considering some of the benefits and potential downsides you need to consider.
Some of the benefits of staking cryptocurrencies:
- Passive income – returns can range from attractive to outrageous and can provide passive income corresponding to varying risk appetites;
- Low Entry Bar – Staking is easy and can be done with a few simple clicks, especially on major exchanges that now offer staking services. Users do not need a huge amount to start staking, and staking is also energy efficient.
Here are some of the risks associated with staking cryptocurrencies:
- The possibility of hacking into a protocol or exchange is the main reason why some crypto investors stake in hardware wallets;
- The possibility of a fall in the value of the coin, especially in unstable market conditions. When coins are locked up for the staking period, you will not be able to liquidate your holdings if the price goes down;
- Validator nodes holding your tokens may be blocked if they do not maintain 100% uptime when processing transactions.