To enjoy multiple sources of passive income in the world of cryptocurrencies, you can use airdrops, hard forks, lending, lightning nodes, mining, running a master node, buybacks, affiliate programs, etc. But one of the most interesting sources is staking. Let’s take a look at it.
What Is Staking
In general, staking is similar to keeping money on your term deposit. You don’t need any mining equipment, only a certain amount of tokens or coins proposed by the rules, and you can start staking. Your assets are typically in a wallet or on a platform that is connected to the blockchain (for offline solution, you can use cold staking, see below). The primary benefit of staking is that it removes the need for purchasing expensive hardware. On the other side, the tokens or coins are locked up for some time, and you are not able to manage them as long as they are at stake.
Staking typically works on blockchains that utilize the Proof of Stake (PoS/POS) model or, in non-PoS systems, through procedure design features. The Proof of Stake concept states that a user can mine or validate block transactions according to how many coins he holds. Examples of PoS tokens are Stellar (XLM), Neo (NEO), Cosmos (ATOM), Ontology (ONT), Decred (DCR), Qtum (QTUM), Waves (WAVES), etc.
Proof of Stake is different from the Proof of Work (PoW) mechanism, where proof is needed that work of some kind occurred, usually a processing time from a computer. The Proof of Work concept is typical for mineable coins, such as Bitcoin (BTC), Litecoin (LTC), Monero (XMR), Zcash (ZEC), Dogecoin (DOGE), DigiByte (DGB), etc.
Cold Staking
With cold staking, you can begin staking cryptocurrencies but hold them on a secure wallet that is not linked to the internet at all times, i.e., on a hardware wallet. Naturally, cold staking is much simpler, easier and safer than regular staking. The process is quite straightforward: Load your assets into your wallet and go offline. Open your wallet weeks or months later and see the staking rewards that you have made. Some examples of interesting cold staking cryptos are:
- VeChain (VET)
- Neo (NEO)
- NavCoin (NAV)
- Particl (PART)
- Stratis (STRAT)
Staking Pool
If you don’t have enough crypto assets to make your staking profitable, a staking pool can be an interesting option. A staking pool utilizes the combined resources of stakeholders, thereby increasing their staking power and how fast they can validate a new block. Staking pools are focused on making the most out of the combined staking capacity. Generally, the bigger the staking pool, the higher the chances that the staking pool will be picked and that it will verify a block. For example, if you hold 1,000 Cardano (ADA) tokens, your staking chances will be much slimmer compared to a staking pool holding 1,000,000 ADA.
The downside of a staking pool can be the safety of your assets. Before joining, it is a good idea to learn the details of your staking pool, and have answers to some fundamental questions: Who are the operators of the staking pool? What is their background? How will the staking rewards be distributed? How transparent are all these processes?
Staking at an Exchange
Some exchanges offer staking benefits to their users, making it the easiest way to benefit from staking. The plus is that the exchange will take care of all the technicalities for you, but you have to count with some fees for this service. And of course, you need to hold your assets at an exchange.
Age vs. Volume in Staking
- Age of the tokens: Some staking algorithms work with the age of the tokens. The longer you hold your tokens in the staking mechanism (the higher the „age“ of your tokens), the bigger are your chances of staking profits. As a newcomer, you will have to wait for your first staking earnings until the „older“ participants get their rewards.
- Volume/size of the stake: The bigger the volume/size of your stake, the higher your chances are for staking rewards. This mechanism is the reason why some users join staking pools; to work with bigger token staking volumes.
The Pros and Cons of Staking
Pros: In case you already have tokens that are suitable for staking, it makes sense to benefit from this feature. With quality assets, the long-term gains can be very interesting: You might profit through staking, and your tokens might go up in value, as well.
Cons: You need to lock your coins for a certain period, and you cannot spend them. Some staking tokens generate massive staking gains, with dozens of percent annually, which looks nice on the surface. But some of these tokens lose their value over time. Why? They have a low market cap, low trading volume and low utility. To put it simply, the users and the market just don’t find them really useful. Instead of holding these tokens and/or staking, you might have been better off just “hodling,” or holding your Bitcoins.
Examples of Staking Coins and Tokens
Examples of the APY (Annual Percentage Yield) – the annual rate of return earned on the deposit as of October 20, 2020:
| Annual Staking Reward | Asset |
|---|---|
| 20.00% | VICTORIA VR (VR) |
| 11.00% | DEXFIN (DXF) |
| 10.00% | Neblio (NEBL) |
| 8.88% | PIVX (PIVX) |
| 8.85% | Ark (ARK) |
| 8.02% | Cosmos (ATOM) |
| 5.49% | Tezos (XTZ) |
| 5.10% | Komodo (KMD) |
| 4.78% | Waves (WAVES) |
| 4.08% | Tron (TRX) |
| 1.06% | VeChain (VET) |
| 0.97% | Neo (NEO) |
But there are assets with return on investment going up to over 100% with over 80% of their total volume staked. Thus, the annual staking reward cannot be the only feature to look for. We should also take into account the Market Cap, 24h Volume and the Total Staked volume. If the staking reward is extremely high – dozens of percent, with dozens of percent Total Staked volume – but the Market Cap and the 24h Volume is low, we might be looking at a token that exists just for the sake of staking, without much utility value. Before deciding for any token, it is a good idea to learn about the project behind this token as much as possible to make an informed decision.
Staking at DEXFIN Exchange
As we have seen above, staking at an exchange is one of the most user-friendly ways to enjoy passive income from crypto assets. DEXFIN Exchange offers highly attractive features:
- Stake DXF (DEXFIN Token), BTC or USDT.
- Receive up to 11% annual interest.
- Save 50% on fees using DXF tokens when trading.
- Take part in airdrops of newly listed tokens (for holders of min. 10,000 DXF).
- Use DXF to buy newly listed tokens during their pre-sale phase with a large discount.
Massive Airdrop of VIRTUAL VR Token from DEXFIN
DEXFIN offers the most interesting airdrop ever seen in the world of crypto to the hodlers (or holders) of DXF Token.
What You Get for Every 10,000 DXF
For every 10,000 DXF, you get:
- Bonus of 11% annual interest for locking your DXF Tokens in staking.
- Bonus of 100,000 VICTORIA VR Tokens.
- Bonus of 20% annual interest for locking your VICTORIA VR Tokens in staking.
VICTORIA VR Tokens Useful for Everybody
The airdrop of VICTORIA VR Tokens is not only extremely generous but the entire project of VICTORIA VR brings in features set to make VR Token really useful and very interesting for everybody.
- VICTORIA VR airdrop comes from DEXFIN that offers two quality projects in one package.
- VICTORIA VR Tokens will be available primarily to DEXFIN (DXF) Tokens holders and DEXFIN Exchange users.
- VICTORIA VR pays out its annual reward for staking of 20% immediately at the moment when you lock your VR Tokens in staking. Thus, you can immediately use your reward to purchase valuable assets within the virtual reality environment, such as a piece of land, a presentation room, a learning center, and many others.
DEXFIN is preparing trading and other business activities in virtual reality where VICTORIA VR Token will be used for everyday payments. Doing everyday tasks in virtual reality will become a necessity. Due to the current situation with ongoing restrictions when it comes to personal and business meetings, presentations, events, exhibitions, concerts, sports events, shows, coaching sessions, training programs, teaching, learning, and so on, virtual reality will become a perfect, logical solution. The prices of the equipment are getting close to the prices of common smart-phones, thus, the VR headsets will become a common thing in most households.
All this is set to make the VICTORIA VR Token an extremely practical and useful cryptocurrency.
Is Staking for You?
To sum up, staking can be a very interesting source of passive income, since it can provide more predictable and regular staking rewards. Besides that, it enables stakeholders to create residual income without having to stress over the technicalities related to mining
