Many crypto owners want to go beyond the “Buy&Hold” strategy for more earnings, but, on the other hand, they don’t want to spend time on technical analysis and constant monitoring of market situations. Thus, crypto enthusiasts are increasingly exploring ways to passively make money on digital assets, one of which is staking.
If to describe staking in one sentence, then it consists of storing funds in user wallets to support the network and receive rewards for them. There are several types of staking, including Smart staking on the WhiteBIT exchange. Today we’ll look at the main mechanisms of this type of passive earnings and discuss its advantages and disadvantages.
How staking works
As we mentioned above, staking is the process of holding crypto assets on wallets in order to improve the efficiency of the blockchain network. Staking is in line with current industry trends, and many users note that this method is convenient for generating passive income.
It is worth noting that classic staking is available in networks based on the proof of stake (PoS) consensus mechanism. Ethereum staking is a good example of such a scenario.
The main advantage of staking lies in its comparison with mining, in which you need to spend money on the purchase of equipment. Stakers are not burdened with this problem since their level of earnings doesn’t depend on the device’s power. You have only to calculate how much income you want to receive depending on the planned investment.
Types of staking
There are several types of staking in the industry at the moment:
- Standard. It is based on the Ethereum blockchain, and since it is a PoS network, it should be understood that income depends on the amount of cryptocurrency in the wallet. However, those who have minimal stakes have a chance to receive a reward. Unlike Bitcoin, in order to connect to a new blockchain, you only need to purchase a specific asset that is used on the network.
- DPoS. This type of staking is a logical continuation of the PoS technology evolution. It was created in order to solve the scaling problems that exist in the Ethereum consensus. It should be noted that DPoS staking is actively used by rapidly developing projects, and it is based on the principles of democracy. For the production of blocks by the community, several network members are selected, and those who voted for them receive their percentage of the profit.
- Leased Proof of Stake. This is a fairly popular type of staking, in which users’ funds are “leased” to verified nodes. This type of passive income is suitable for those who are not ready to make large investments but want to receive a stable income without risks.
- Masternodes. Recently, special attention has been paid to this particular type of staking, where those participants who make large crypto deposits to the network become masternodes. Such nodes have the highest trust and reliability rating.
What do you need to get started?
Staking is suitable for both beginners and industry professionals due to its simplicity and a minimal level of risk. Having picked up a coin from the list of popular assets, everyone can receive a constant income.
In order to start making money on staking, you first need to decide on a suitable cryptocurrency. Pay attention only to reliable projects that are already well established in the industry.
After that, set up your virtual wallet and purchase the assets of your choice on the crypto exchange.
Done! After the funds are credited to your balance, you will start earning in a passive way.
SMART staking on WhiteBIT
The active community demand for staking gives rise to the development of new approaches. WhiteBIT cryptocurrency exchange makes this method of passive earnings even more accessible for each of its users and offers to join SMART staking.
The SMART staking page features over 40 different plans with a great variety of coins. You can choose the one that suits you based on the size of the interest rate, terms, and the minimum/maximum amount of the deposit.
That being said, you can participate in several plans at the same time, getting more benefits from staking. At the end of the period of the plan, it will be automatically closed, and your funds with the interests will be credited to the main balance.
For example, you decide to participate in the USDT SMART plan for a period of 360 days and with a 30% interest rate. Having held 10,000 USDT, you will have 13,000 USDT on your balance in 360 days!
The advantages and disadvantages of staking
At the moment, staking is a low-risk tool for generating passive income. And for a good reason, as users note its main advantages:
- it is suitable for everyone, without the need to purchase expensive equipment;
- staking investments are considered low-risk;
- the original investment amount is protected and will be returned with a profit.
At the same time, some skeptics believe that staking isn’t a good tool since you cannot operate with the coins that have been invested until the end of the staking period.
However, it is worth agreeing that staking is an excellent option for everyone who wants to make money on the crypto market. It is worth actively using this opportunity to increase your investments.
