Owning cryptocurrency comes with a lot of perks, in particular, the ability to earn a sizable fortune if you make the right bets on the right coins or tokens. Another positive element to crypto is staking, which allows traders and investors to earn rewards in exchange for holding certain types of cryptocurrencies. Here we explore the ins and outs of “staking” and how you can partake.

What is Staking?

Certain cryptocurrencies—like Ethereum from the ETH2 upgrade—provide the ability for holders to engage in staking. Staking is a lot like savings, and one way to think about it is that a “staking pool” is very similar to a savings account that accrues interest. While staking, your cryptocurrency earns interest in the form of “rewards,” which occur because your staked crypto is actually being put to use on the blockchain. The staking is part of a “consensus mechanism,” which is a process that helps ensure transactions are secured without the middleman of a bank or payment processor. This process is called “Proof of Stake,” and is what your crypto investment will be a part of if you elect to enact your staking option.

What are Proofs?

The idea behind Proof of Stake is to help reduce blockchain network fees while simultaneously increasing the speed of the platform. Proofs help reduce network costs by moving transactions away from miners who are churning out energy-intensive math problems and over to holders of crypto who are participating in staking and can validate transactions through their holdings. Instead of miners, network participants are chosen to add batches of transactions to the blockchain and earn crypto or other rewards in exchange. Having holders put up their tokens for an opportunity to add a new block onto the blockchain in exchange for a reward allows the tokens to act as a legitimizing force for the newly added transactions. The larger the stake and the longer it’s been held will increase the likelihood a certain participant’s stake is chosen.

Advantages and Disadvantages of Staking

The clearest example of a staking advantage is the fact that your crypto assets are working for you while they’re sitting in your crypto wallet. Staking your long-term crypto holdings allows those coins to generate more wealth for yourself rather than simply sitting in your collection. Another advantage of staking is that you can use it to support the efficiency and security of projects you support. By staking funds, you’re helping the blockchain become stronger and faster in its ability to process transactions and also enable it to be more resistant to attacks.

The main risk associated with staking are the vesting period in which your crypto cannot be transferred, so if you’re planning on or trying to move your crypto, it’s probably not a good idea to explore staking.


How Can I Stake?

In order to stake, you’ll need to pay to play. For example, in order to stake with Ethereum, you’ll need to provide a minimum investment of 32 ETH, will need technical knowledge, and a powerful computer that can perform validations. You’ll also need to commit to your staking, because if your validations hit a snag or lag, your stake could become slashed. For most others, joining a staking pool is the easier and more efficient way to go. Companies like Coinbase offer lower barriers of entry so that you’re able to start earning rewards faster while putting up a smaller cost.

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Starting Your Portfolio With EthereumMax

EthereumMax is a decentralized cryptocurrency that gives holders control of their digital assets without the need for an intermediary. EMAX Tokenomics remain 0% tax on buys, with a 9% tax on sells and transfers. From the 9% tax, 3% will remain in the treasury and 6% will manually be burned every other week. Check out https://ethereummax.org for more information on why EthereumMax is quickly becoming one of the most robust tokens within the crypto ecosystem and set up your eMax wallet to start your cryptocurrency journey today.