How to Stake Crypto in 2022: The Ultimate Guide
Staking is increasingly becoming popular thanks to Ethereum’s Proof of Stake Merge. Ethereum blockchain, for the longest time, operated with the Proof of Work algorithm, which is relatively slow.
Hold up! Do you know what is cryptocurrency staking? Or better yet, how to stake crypto in 2022? If not, don’t worry! This article highlights the basics of staking and how to stake crypto this year. Without further ado, let’s get started, shall we?
Crypto Staking: What is cryptocurrency staking?
In simple terms, staking is a concept of mining cryptocurrencies. Staking involves committing your cryptocurrency assets to confirm transactions and support the blockchain network. More importantly, staking is available only in cryptocurrencies that use the PoS (Proof of Stake) model to process their payments.
PoS is an energy-efficient alternative compared to the Proof of Work algorithm. And that’s not all! POW requires the miners to purchase expensive mining devices that use computing power to help solve complex mathematical equations. Staking is an excellent way to earn passive income from the cryptocurrency network since some cryptocurrencies offer high-interest rates.
Crypto staking in 2022: How it works
Through staking, new blocks in the blockchain systems can be added, and the transactions can be completed. In 2022, you have to pledge your coins to a cryptocurrency protocol to get started with staking. And from the participants, the protocol will choose the validators who will confirm the block of the transactions.
It would help if you remembered that the more coins you pledge, the higher your chances of being chosen as a validator. Once the new block is added, the validators get staking rewards as new-minted cryptos in the blockchain. Typically, the staking rewards are the same type of cryptocurrencies the participant is staking. However, some blockchains will likely use other cryptocurrencies as rewards.
You will need to own cryptocurrencies that use the PoS model to stake cryptos. Afterward, you choose the amount that you want to stake. You can do this in a popular exchange. After staking, you still own the cryptos. The only difference is that your coins are now at work. You additionally have the right to un-stake your cryptos whenever you want to use them. But to get rewards, there’s always a minimum staking time.
Cryptocurrency staking: How to stake cryptos in 2022
Proof of Stake is highly scalable when compared to POW. That said, most cryptocurrencies are now using the PoS algorithm. Here’s a step by step guide on how to stake your cryptos in 2022:
- Purchase a PoS cryptocurrency
Staking only works with cryptos that run on the PoS algorithm. Therefore, you will need to purchase cryptocurrencies with this mining method. Some of the cryptocurrencies that run on the PoS algorithm include:
- Ethereum (ETH): Ethereum started with the POW and is currently on the verge of completely running on PoS. As we speak, Ethereum has two systems working concurrently, and the Merge will shut down the POW network once it happens.
- Solana (SOL): Solana was built to perfect the shortcomings of the original ETH, for instance, scalability by using PoS. This network has low transaction speeds.
- Cardano (ADA): Cardano is a peer-reviewed crypto network that operates on the PoS algorithm. The platform combines security and stability with pioneered technologies.
- Polkadot (DOT): DOT is a cryptocurrency network that allows interoperability between blockchains.
But that’s not all! There are dozens of cryptocurrencies in the market that operate on the PoS protocol. Start by learning about them, so it makes it easy for you to identify cryptos with this type of system. Afterward, find the best cryptocurrency exchange to purchase these coins.
- Transfer your cryptocurrencies to a wallet
Once you’ve purchased ‘stake-able’ cryptos, you will have to transfer the coins to your wallet. Typically, some exchanges will allow you to join staking programs available on their site. And if that’s the case, all you have to do is transfer the coins to the staking wallet.
However, if that’s not the case, you will need to transfer your coins to your blockchain wallet. Wallets are considered safe spaces to store your cryptocurrency. Then you can transfer the coins back to an exchange that offers staking opportunities for your cryptocurrency.
- Enter a staking pool
Typically, cryptocurrency staking works differently depending on the crypto you are working with. However, most, if not all, require you to join a staking pool. Here, cryptocurrency investors combine their funds together to increase their chances of earning staking rewards.
Staking pools are considered to be reliable and an excellent idea to increase your chances of winning the rewards. Additionally, staking pools help to cut the staking fee. All the same, you need to remember that the staking pool’s size will account for the reward that you will earn. The smaller the size, the higher the reward, but the less likely it is to be chosen to validate the block.
Should I stake cryptocurrencies in 2022?
Staking is an excellent way to earn passive income in the crypto market. More importantly, as a crypto investor, even after staking, you still end up owning the cryptos. There are certain challenges that come with staking, but typically, the whole experience benefits the validators. So, is staking a good way to earn cryptocurrencies in 2022? Of course, yes. All you have to do is ensure you understand the crypto you are staking.
Where to purchase cryptocurrencies using PoS?
Kullion is a cryptocurrency exchange platform that comes with an easy-to-use interface. You can access all the PoS cryptos on this platform with a single touch of a button. What’s more, Kullion also includes an application that’s downloadable on App Store and Google Play.
At Kullion, you can buy, sell, and swap your cryptocurrencies safely and securely. The best part about this platform is that you don’t have to move your cryptos to an external wallet to start staking-no siree! Kullion offers staking services as well. So, what are you waiting for? Grab your PoS cryptos on Kullion and start staking today!