A Guide for Crypto Staking And What Are The Risk Of Staking?

Umme Haani
Umme Haani is a writer for Thecoinrepublic. she contributes a researched piece on cryptocurrencies and updates. Umme is an aspiring engineer who immensely enjoys writing and technical writing brings the best of both worlds under one roof for her.
  • There is some profitable proof of stake cryptos that let you stake and earn interest.
  • Some examples of Proof Of Stake Cryptos are Tezoz (XTZ), NEO, DASH, Reddcoin, PIVX, etc.
  • The blockchain does not function without proof of staking which functions using a particular type of algorithm.

Crypto staking is a way of passive income. You need to have numerous crypto in a secure wallet to earn a reasonable amount of interest. There is some profitable proof of stake cryptos that let you stake and earn interest. Some examples of Proof Of Stake Cryptos are Tezoz (XTZ), NEO, DASH, Reddcoin, PI cryptocurrency network, etc.

After buying crypto staking coins in a secure wallet, you need to enable the option of staking. In staking, the wallet uses a blockchain network named Proof Of Stake or POS. The blockchain does not function without proof of staking which functions using a particular type of algorithm.

You just need to place the coins inside the wallet with unrestricted connection with the blockchain. Then with the help of POS, the crypto owners successfully stake their coins by operating under the blockchain that has stacked their coins. For making new blocks and validating transactions, these coins will be used.

There are some groups of miners who take care of the operation of blockchain on a proof of Work model. Binance, Gate.io, CoinBase and Atomic Wallet are some wallets you can use for stacking. There are many selection models of staking. For example, in a selection based on cold-age, the selection is based on the actual amount of staking coin and number of days to stake.

Risk of Staking

However, there are some risks in staking. For example, you may experience Slashing risk after staking. Slashing risk can occur when there is liveness fault, security or governance fault. Other notable risks are unstable node operation and risk connected with token price. The ledger nodes should be kept online 24/7.

If the node’s technical level is lowered then there is a chance of double signing and block loss. This can cause Slashing penalty. Weakened liquidity is another risk of Staking. The POS project can have a lock-up period for several months.

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