Safely Staking Your Coins on Binance for Guaranteed Returns
Unlocking passive income
I am not affiliated with Binance in any way, and this article is not meant to promote Binance either. This article is for educational purposes.
Let’s dive in.
A Brief History of Binance
Binance is one of the largest cryptocurrency exchanges in the world, based on its trade volume. Its founder is Changpeng Zhao, and it was founded in 2017.
Binance has three different flavors of staking that can help us earn passive crypto income, and they are:
- Staking
- Defi-staking
- ETH 2.0 Staking
What is crypto-staking?
Crypto staking is simply locking up your cryptocurrency for a set period in order to support the operation of a certain blockchain; in return, you earn more cryptocurrency. i.e., putting your digital assets to work in order to earn passive income.
Crypto staking can be simulated as depositing your money into a high-yield investment account or a mutual fund investment where you earn rewards passively.
Back to the three flavors of staking
Getting started
1. Staking
With staking, you are staking your coin with a particular coin and getting rewarded when you complete your staking period.
To stake our coins, you have to download the Binance app, if you do not have one already. After you download the app, simply navigate to “more” on the home screen.
Scroll down to “finance” and select “staking.” You will see “staking and “defi-staking” Then you can select from the list of coins below and the lock-up period depending on the availability of the coin and the type of staking you want.
The interest you would earn depends on the lockup time, and basically, the longer the lockup time, the higher the interest earned.
Note: You can only stake in the type of coin that you own in your spot wallet.
To make your search for coins available for staking easier, click on the search button, and the list of all available coins will pop up.
An example of a completed stake on Binance is shown below. 👇
This is the next page that should pop up after you stake on Binance. Read and accept the service agreement, then confirm your stake.
Pros and cons of staking
Pro: You can withdraw your coins earlier than the lockup period.
Con: You won’t earn any interest if you withdraw early, and withdrawals can take longer.
2. DeFi-Staking
Decentralized finance staking (DeFi-staking): with this type of staking, you are sending your coin to a decentralized finance mining project. This type of staking is risky as it can lead to a complete loss of coins if the mining project fails.
Note: Binance is not responsible for any loss incurred through DeFi-Staking.
Binance vets this project and makes sure it is suitable for investment as a way to help its users, but past results do not guarantee future results.
Pros and cons
Pros: You can redeem part of your stake, and you will not lose your interest earned.
Con: Redemption takes a little more than 2 days.
3. ETH 2.0 Staking
This is just a simple way of earning more Ethereum by staking your Ethereum on the Ethereum proof-of-stake project. From the Binance app, navigate to the “more” button, scroll down to finance, and select “ETH2.0.”
You earn interest daily with this type of staking. The downside of this type of staking is that the higher the number of people staking their ETH, the lower the interest rate. When you stake your ETH, it will be transferred to BETH (a tokenized asset). You can also swap your BETH for ETH after the first phase of your stake.
Pros and cons
Con: The lockup period is usually longer than other staking types.
Pros: You can easily trade your BETH on Binance.
Conclusion
The type of stake that you choose should depend on your risk tolerance. If you have a low-risk appetite, choosing staking would be the best fit for you, while if you have a medium-risk appetite, you can venture into DeFi staking. For investors with a long-term investment goal, ETH2.0 staking can be their go-to. No matter what flavor of staking you choose, currencies have a level of risk and might not be suitable for every kind of investor.
