How to Pick the Right Coins to Stake For You

Cryptocurrency staking is a marvel of the industry. Many believe it has the potential to bring in even more investors, intrigued by the opportunity to earn a passive income on holdings.

How to Pick the Right Coins to Stake For You

But a lot of factors are involved in understanding staking. There are so many stakeable coins right now. Knowing the right coin to stake will go a long way in growing your portfolio. Let's consider a few things to keep in mind when searching for the right coin to stake.

Intro: What is Staking?

Cryptocurrency staking isn't a new concept. However, a lot of people are still be getting used to it.

To understand staking, you need to review a bit of history. When Bitcoin launched, many other cryptocurrencies used it as a model. This meant that they needed to be mined. These coins operate on the proof-of-work (PoW) algorithm, requiring resources that make mining possible.

Over time, PoW coins started getting criticized. Resource consumption - coupled with environmental impacts - made them easy targets for crypto detractors. So, instead of attacking digital assets based on economics, naysayers pointed to the environmental impact.

Given the severity of climate change, the criticisms raised concerns. This led to the development of the proof-of-stake (PoS) standard.

PoS coins work differently than PoW. Instead of miners competing to mine blocks, they commit coins to a blockchain protocol. The blockchain selects a wallet at random to mine the asset, and the wallet's balance is updated with rewards.

Some of today's most popular coins are PoS coins - including Solana, Cardano, and more. Even Ether is switching to the PoS standard right now - an upgrade dubbed "Ethereum 2.0."

How Do You Stake Crypto?

There are several ways to stake crypto. Popular channels include:

Through a Staking Platform

You stake through a crypto exchange. Many top crypto exchanges have native staking platforms that support staking in different coins.

They may ask for a commission for access to the blockchains, but these fees are usually pretty negligible. For the convenience and benefits, exchanges are the preferred option for most people.

Staking Pools

Some investors forgo crypto exchanges for staking pools. While exchanges are convenient, not all exchanges support staking in all coins. Staking pools fill this void, offering expansive support for your activities.

When you join a staking pool, all you have to do is connect your coins via a wallet to the validator pool. Check the validator's website to ensure that they're legitimate and that you understand how they work.

Picking The Right Coin To Stake

This is not so difficult. The general rule is to increase your staking profit as you stake more coins. But you should also consider several other factors, including:

The Value of the Coin:

It's never recommended that you stake coins with high levels of inflation. The rewards could be sizable at the start, but you could end up with no profits due to the coin's volatility. Instead, choose a coin with a history of steady gains, so you know you're covered in the long term.

Fixed Coin Supply:

Another important factor is the coin's supply. An asset with a fixed supply is better for staking because this economic model ensures a healthy balance of demand and supply. Over time, you can rest assured of a proper price boost.

Use Cases:

Once again, never put your money in a coin without a use case. Cryptocurrency demand is based largely on the asset's applications. So, if a coin has real-world applications, its demand is sure to grow, and your staking regards will also increase in value.

Reward Rates:

Lastly, you can check the estimated reward rates to know how much money you could theoretically get from staking. Coins like Cardano offer between 5 and 8 percent in reward rates, which isn't bad.

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