A relatively new kid in the crypto block, crypto staking has taken the digital asset industry by storm- and for all the right reasons. Cryptocurrency staking is currently an $18 billion-worth industry and the PoS market cap shows a spectacular 100%+ growth per quarter. The major driving force behind the popularity of cryptocurrency staking is its huge opportunity for passive income- without elaborate effort from the part of the staker. Inspiring growth in crypto staking trend has led to speculations whether it’s possible to become rich through staking digital assets? Read more
Well, whether you can become rich through crypto staking is open to discussions. But cryptocurrency staking does offer a promising way to build up your wealth. It’s primarily because staking offers high interest to stakers. Then, if you already hold a certain amount of crypto coins, you don’t need to purchase more coins for cryptocurrency staking. A staker can utilize the same coins s/he HODLs for crypto staking. All s/he would need to do here is to keep the coins locked up for a certain period of time. On an average, the lock-in period for cryptocurrency staking would be 1 month to 3 months to 6 months.
Tips to build wealth through cryptocurrency staking
- Choose the right coin
The golden rule of profitable cryptocurrency staking is finding the right coin.
Go for coins with strong fundamentals, such as Ethereum, Cardano, Avalanche, and so on. Your chosen coin must be backed by a knowledgeable team of crypto experts and an ambitious roadmap. Look for coins that are geared to introduce major upgrades in the coming months and years. These upgrades will improve their functionality and eventually demand and market value. Higher market value would surge the coin price and also the staking rewards and yields.
For example, currently, the APY on ETH staking is around 4-5%. After the Merge upgrade, the ETH price is predicted to rise up by 400%. Likewise, the ETH staking APY is also predicted to surge- according to sources, after the Merge upgrade, the ETH staking rewards will rise up to 7 to 12%!
Then, focus on coins that can provide benefits and functionality for the real-life world. Coins built on hype are good neither for HODLing nor for cryptocurrency staking. They will quickly depreciate in the coming few years, leaving investors and stakers with little or no value on the holdings. On the other hand, cryptocurrencies that are developed to serve a real-life purpose are sustainable options and will grow over time.
- Look for coins with high APY
This point is in continuation with the point mentioned above.
APY refers to “Annual Percentage Yield” that is calculated in cryptocurrency staking rewards.
On an average, you will receive 4-6.5% rewards on blue chip coins, including major altcoins. Metavercoins coins have shown to offer way higher APY on cryptocurrency staking rewards. For example, SAND token produces a high yield of, say, 30% on staking rewards. Another good example is AXS that has surprised with 75%+ APY on cryptocurrency staking rewards.
But one thing- some new altcoins might offer 100%+ APY on cryptocurrency staking rewards. While the numbers look tempting yet you never know how the coin would fare in the coming years. The cryptocurrency market witnesses mushroom growth of coins every single year. But, a chunk of coins can’t make it beyond 5 years. An altcoin that shows a 90-100% APY on cryptocurrency staking rewards would leave you with worthless coins if it plummets in the coming two years. So, don’t just jump into new coins exclusively because they are offering high APY at the moment. Look for older options that have stood the test of time.
Most popular coins for crypto staking
- TerraUSD
- Solana
- Polkadot
- Cardano
- Ethereum
- BNB Chain
- Avalanche
- Diversify staking portfolio
Another key rule to build your wealth through cryptocurrency staking is via diversification of your crypto assets. Put simply, don’t just focus on one particular coin for cryptocurrency staking. Rather, if you have invested on multiple PoS coins and if those are available for staking, stake on them. This way, you will be able to earn staking rewards from multiple avenues. It’s like building multiple avenues for passive income- one of the tried and proven ways to amplify wealth.
- Stake on locked staking
There are two ways to participate in cryptocurrency staking- flexible staking and locked staking. In locked cryptocurrency staking, your coins will be freezed for a certain time period. You won’t be able to withdraw the frozen coins until the specified deadline is reached.
On the other hand, flexible cryptocurrency staking allows stakers to withdraw coins (say, for trading) within the locked period. But, flexible staking offers reduced rate of reward compared to locked staking.
So, if you are aiming to make it big with cryptocurrency staking, it’s better to opt for locked staking.
- Try to avoid staking fees
If you are aspiring to make it big with cryptocurrency staking, you have to eliminate the avenues that can eat away part of your rewards. So, look for staking platforms that do not charge staking fees.
Some of the leading crypto exchanges do not charge staking fees. Then, there are exchanges that enable staking on staking rewards as well. Staking on staking rewards will help to compound your ROI from crypto staking.
- Don’t opt for staking pools
Staking pools are a popular option among cryptocurrency stakers as they enable you to participate in staking even when you cannot meet the minimum required amount for staking independently. But, the shared cryptocurrency staking process offers shared rewards. Put simply, if you stake with a staking pool, your individual share of staking reward will be much less in comparison to that of cryptocurrency staking individually through an exchange or wallet.
- Stake in crypto wallets
Crypto staking experts have also suggested opting for hardware wallets for staking when a staker is aspiring to build wealth. Leading wallets generally offer way higher APY on cryptocurrency staking rewards in comparison to exchanges. It’s just that you would have to keep the coins locked-in for a longer period of time.
