What is staking?

Earn rewards by just storing your tokens on a platform.

Staking allows users to help secure a platform or a network by locking up tokens. This could be a flexible option which allows you to withdraw when you want or a fixed period. The rewards are normally greater for a fixed period. This could be for example

• PoS — Proof of Stake blockchain —The user stakes their own tokens and creates their own validator nodes. Validators are then selected randomly to “mine,” or validate the block
• General Staking — Stake your tokens on a centralised or decentralised exchange, the exchange will reward you with a percentage fee for lending them your coins.
• Liquidity Pools — By adding to a liquidity pool you earn profits from trading fees and rewarded platform tokens depending on the platform.

What is the best strategy for staking rewards. This normally comes down to risk, the larger the risk the larger the APR on your stake. APR stands for Annual Percentage Rate, which represents the rewards rate for a whole year, applied to your staked funds.

The low-risk option and simplest method is staking on a centralised exchange, deposit your tokens, walk away and you earn rewards. These APR’s will normally be the lowest.

The Medium risk option is staking on a decentralised exchange you deposit in the same way as above but the deposit pool may also have a deposit fee and requires you to handle the staking transactions through your wallet. If you remove your tokens too quickly you may not have earned enough rewards to cover the deposit fee. Also, a lot of these platforms will reward you in a different token to your deposited token.

The Higher risk option is staking lp tokens into liquidity pools, you will deposit 2 tokens of the same value (50% — 50%,for example if $XYZ coin is $30 then you deposit 1 XYZ & 30 USDT)into this pool.Depending on the volatility of the tokens you deposit and the variable APR the rewards can be hard to calculate and more complex for the user to support the liquidity pool.

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