If you are even superficially interested in making money on cryptocurrencies, then you have probably heard about trading and mining. As the fundamental cryptocurrency market grows and digital assets rise in price, you can simply convert USDT to TRX and hold coins in anticipation of a significant rise in price. This strategy is known as hodling. In addition, there is another way to earn money – staking, which is sometimes called mining for the lazy.
Staking is a bit like hodling, but your coins are not just in the wallet, they work and make a profit. Outwardly, it looks like a bank deposit: you block coins for a certain period, and after it ends, you get back the body of the deposit and accrued interest.
Staking is not as nerve-wracking as trading and is much easier from a technical point of view when compared to mining.
There are different types of staking: fixed, perpetual and DeFi staking.
Fixed staking involves setting an initial blocking period for coins. During this period, the coins cannot be redeemed, but the investor can receive a reward after the expiration of the set period.
In the case of perpetual staking, coins are locked indefinitely and remain locked until the user decides to withdraw them. Rewards are paid regularly as long as the coins remain staked.
First of all, mining is very expensive. To start mining, you need to purchase specialized equipment, master its use and pay significant electricity costs. Yes, there are coins that can be mined on user-level devices, but to be honest: do you know a lot about them? If not, but this is significant enough: little-known coins are unlikely to bring high income.
For staking, huge investments are not required (although desirable), and specific technical knowledge is not required from you either. You just need to buy coins and join the pool. Capital can be gradually increased by purchasing the asset you need on CEX or LetsExchange.
However, staking also has its risks and disadvantages. First, the expected return from staking is usually small and can be comparable to the return on bank deposits. Secondly, if coins are stored on exchange wallets, they may be vulnerable to hacker attacks. Also, as with any investment, there is a risk of asset depreciation.
How to choose the right cryptocurrency for staking? If you have already been interested in how to mine TRX, then the first claim to a place in your portfolio is already there. It is important to take into account not only technical characteristics, but also assess financial risks. Staking is possible in networks that use the PoS algorithm in its various modifications, such as ATOM, XTZ, DOT, TRX, ADA, VET, SOL.
When choosing an asset, you need to pay attention to several key factors. It is important to take into account not only interest rates, but also the price of the coin, demand, its liquidity in the market and the time of asset blocking. For example, the low liquidity of a coin can almost completely offset both high interest rates and, possibly, the high cost of a coin. Long-term blocking of funds is excellent in terms of the increase in the number of coins. But where is the guarantee that tomorrow the market will not turn against you and your asset will not fall in price by 30-40% in a matter of days?
First of all, you need to have a wallet that supports this feature. Some popular cryptocurrency wallets such as Ledger and Trust Wallet provide staking support. Staking is also available in official coin wallets running on the PoS algorithm.
A similar opportunity is provided by many top cryptocurrency exchanges, such as Binance, KuCoin, Coinbase. Please note that the number and range of PoS coins with passive income support on different sites is very different
Before you start staking, it is important to remember that all cryptocurrencies are high-risk assets. You should not invest more than you are willing to lose.