How does crypto staking work?
Financial markets have evolved over and over again since the day humanity existed. The final stage of this evolution was perhaps the birth of crypto assets that attracted the most attention of people. As the interest in these cryptocurrencies increases day by day, its use is increasing, and people who are interested in this market hope to gain from it.
Instead of keeping coins only in wallets to earn from cryptocurrencies, you can earn by staking these cryptocurrencies. Most of the crypto wallets and exchanges started offering cryptocurrency staking after 2020, in order for users to earn passive income from cryptocurrencies. For example, some exchanges and wallets provide 12% annual earnings to their users through staking transactions.
Good profits can be obtained with staking transactions, but for this, detailed information about cryptocurrencies must be obtained and a secure wallet must be selected with the right company. With staking transactions, passive income can be obtained regardless of the rise or fall of the market. However, for this, the right crypto assets must be purchased at the right prices. If this is done, the investor has made use of his money for himself and earns passive income.
What is crypto staking?
In the simplest terms, staking can be compared to locking cryptocurrencies to get rewards. In other words, cryptocurrencies can only be deposited by not being kept in exchanges or wallets, and not bad returns can be obtained. Most popular cryptocurrency exchanges and wallets such as Binance, Coinbase, Kucoin, Kraken, and Poloniex offer their customers cryptocurrency deposits.
The interest rates when staking crypto
Actually, this system works similar to the classical banking system. Banks pay you interest for the money you deposit in their deposit accounts, while on the other hand they lend your money to other customers at higher interest rates. With this method, they both earn customers money and earn themselves.
The crypto system works similarly to the banking system. In the crypto world, you can earn income from your money in 3 ways. The first is to earn interest income as in conventional banking. The second is to earn income by staking your crypto assets. The third is the way those crypto fund managers invest and buy assets with your money. For this reason, it is very important that the exchange or institution you open an account with is reliable.
If you invest in something, you have to believe that you will profit out of it
Despite the widespread use of cryptocurrencies, many people are still skeptical of them. If investors are hesitant about a financial instrument, it would be best not to invest in that instrument. The following should be well known about staking your assets; As a result of staking, you earn passive income regardless of whether the value of the asset decreases or increases.
Crypto coins Proof of Stake (PoS)
The more Bitcoin or altcoins you have in the Proof of Stake (PoS) system, which is a mechanism by the cryptocurrency blockchain that allows a person to mine or verify the blockchain depending on the cryptocurrency they own, the more mining power you have.
Staking crypto coins in a hardware wallet
One of the most suitable examples for staking transactions is Algo, the crypto currency of the blockchain called Algorand. To stake Algo, you only need to own it. You can easily stake without having to transfer it to someone like Tezos. You don't need an extra process. The mission of the Algorand blockchain is to create an economy accessible to all, with a digital currency that works fast and instantly. The purpose of Algo or Algorand is to find solutions to 3 basic problems of blockchains such as decentralization, scalability and security.
Open the trading platform where you prefer to buy cryptocurrency and buy some cryptocurrency right away. For example, after selecting Algo from the Crypto.com mobile app, check its current price. As a strategy to invest in the cryptocurrency market, you can expect the price of the coin to break an aggressive counter-trend line.
You pay less transaction fees when you use wire transfers for purchases. It takes some time to confirm and complete the purchase. Once complete, you will have the number of Algo coins you choose to buy in the Crypto.com app based on the amount of capital in your investment plan. Then you can go to the Accounts section and see how many coins you have in your wallet, what price you bought and what your total cost is.
Then, when you go to the Earning section of the application to view how much you have earned since you started staking your coins, you will see how much profit you have made until that day and how much you will earn at different expiry rates with the coin you just bought. If the rate you will win seems to be a very low amount, you may choose to deposit your coins into the Ledger wallet.
Install the Algo app on Ledger wallet
Ledger is the most reliable crypto wallet as it is offline. Since it is not connected to the internet, the transactions you need to do while buying or selling crypto coins are given below. In the previous section, we assumed that you purchased Algo coin. We will continue the transactions according to Algo;
1) Open Ledger Live app on your phone and install Algo app
2) Go to Accounts and click the plus button in the upper right corner to add an account and select Algo
3) Search for Algo again in the app catalog when Ledger Live requests 'Allow Ledger Manager on Your Device'
4) Tap Install, which will start the installation of the Algo app.
All cryptocurrencies are stored in different accounts
All cryptocurrencies stored in the Ledger Live app are in different accounts and each is called a different app. To put your cryptocurrency into your Ledger wallet, you must first install that coin's app, then add the account.
Withdraw crypto to Ledger wallet
Tap Withdraw to transfer algo coins to your Ledger wallet. Then click Add Wallet Address and paste the address from the Ledger wallet. You can call the wallet name part Ledger X. After clicking the Continue button, you will see the warning "Check your e-mail to confirm your new wallet address".
You don't need to do anything
For example, if you bought 250 Algo, 1 of them will be charged as a fee and you will send a total of 249 Algo. After clicking the confirm button, Algo will be removed from your balance on the trading platform you purchased. You can then return to the Ledger Live app and check its status in your wallet. Then you can go to the Accounts section of the Ledger Live application, select Algorand, and check whether you have crypto staking rewards from the bottom of the page. At first glance, the reward may not be available, but the rewards will take a very short time to load. Just refreshing the page a few times may be enough to see the rewards. Unlike what you will do in Tezos, there is no need for authorization. So you don't need to send delegation rights to any Baker or anything like that. For Algo, all you have to do is have Algo in your Ledger wallet.
Claiming crypto staking rewards
You can request your rewards by clicking the Claim button, but they will already be added to your account. But sometimes "The rewards are smaller than the estimated fees that could be charged." warning may appear. Therefore, you can click Request after waiting for a while. Remember that you will receive crypto staking rewards approximately every 20 minutes. Staking Algo coins on Ledger is quite easy. All you have to do is to keep the coins in your wallet. Later, the rewards will be added to your account. The more coins you have, the higher your crypto staking reward will be.
In this article, we tried to explain how to buy cryptocurrencies, how to send cryptocurrencies to a wallet, and how you can start receiving rewards by staking crypto money. Right now, Algo is the easiest way to earn crypto staking rewards. But always keep track of different cryptocurrencies and prize percentages. The advantage of Algo compared to Bitcoin and Ethereum is that you don't have to lock it down. Since Bitcoin and Ethereum are Proof of Work and there is no Proof of Stake coin, you cannot put them in Ledger or other wallets. Thank you for reading. We hope the article was useful for you.