Staking your crypto might be the best way to earn more from your holdings, but it’s also one of the most misunderstood opportunities that exist today in the world of blockchain technology. In order to know why staking your crypto is one of the best ways to earn, here are five reasons why staking your crypto is not only beneficial, but also safe and secure.
What is Crypto Staking?
Crypto staking is a process in which people hold a certain amount of cryptocurrency in their wallet and participate in the operation of a proof-of-stake (PoS) blockchain network. In return for staking their crypto, they are rewarded with a portion of the transaction fees and newly minted tokens that are generated on the network. When talking about earning interest on crypto, we often think of lending on platforms or staking. When you stake your crypto, you are essentially holding onto it and not lending it out in return for interest payments.
The benefit of this is that you avoid the risk of losing your crypto if the platform you lent it goes through collapses. Especially during the pandemic, the economy is not as rosy as the past. A lending platform is likely to suffer the risks of losing your money.
Crypto staking is becoming an increasingly popular way for people to earn a passive income from their cryptocurrency holdings.
Why Staking Your Crypto Is the Best Way to Earn
1) High Interest Rate
If you’re looking for a low-risk way to earn high rewards on your crypto holdings, staking is the way to go. The longer you stake, the higher APY you get. Filet has the most desirable and competitive APY compared with other staking platforms. Filet is a Filecoin mining power tokenization protocol that runs on the blockchain. It tokenizes Filecoin mining power and introduces it into the DeFi ecosystem to provide FIL holders with risk-free and high-growth FIL staking services, and the annualized FIL return is as high as 30%. It also has flexible staking period, APY up to 10%-18%.
2) Passive Income
Additionally, staking provides a safe and reliable income source that can help you grow your wealth over time. High rewards from staking can further offset the risks associated with holding crypto and serve as passive income when your salary is low or unstable.
3) Very Low Risk
When you stake your crypto, you are essentially just holding onto it and not selling it. This means that you are not taking any risks with your investment. In fact, staking is one of the lowest risk ways to earn on your crypto holdings. It’s much safer than most other investments like stocks and bonds because if something happens to your investment, there is a way for you to get back what you have lost. There’s always the chance that something bad could happen and people who own stocks or bonds will lose their money but those who stake their crypto have no such worry because they have a guarantee of getting back what they have invested
4) Reduces Volatility
When you stake your crypto, you are essentially locking up your coins for a set period of time in order to earn rewards. This is beneficial because it reduces the volatility of your holdings. In a bear market, staking can help you avoid selling your assets at a loss. You don’t have to be active on exchanges or worry about trying to trade at just the right time-staking lets you take some profits off the table and still keep going strong.
One of the main reasons people stake their crypto is for liquidity. With staking, you can earn rewards without having to sell your tokens. This is especially important if you believe in the long-term potential of the project.
Take Filecoin as an example. Filecoin sets FVM as its recent target and the goal of FVM is to enable users to deploy their own smart contracts on the Filecoin blockchain, and FVM brings universal programmability and compatibility, so Filecoin with FVM will continue to boost the entire ecosystem.