What is the cryptocurrency staking? Depending on the technology on which each cryptocurrency is based, a process called “staking” may or may not be carried out. This process allows the generation of new cryptocurrencies through what is known as Proof of Stake or “Proof of Stake”, and in this way, by participating in the network, we can receive an interest in return.
Staking can be done on a fixed term (also known as Blocked Staking) or on a flexible term. Blocked staking is very similar to a traditional fixed term. The money is placed for a specified period at a fixed rate. The same thing happens with cryptocurrencies, they are placed at a certain time in which in that period of time they will not be able to be used. If we decide to cancel the investment early, we will recover our capital, but we will receive less interest than we should have received at the end of the term.
On the other hand, a flexible staking offers us the advantage of having a very good rate and at the same time the differential of being able to use and dispose of our funds whenever we want without having to comply with any minimum period of time, but at a lower rate.
How much can you earn by stake cryptocurrencies?
Staking, being a process that can be done with multiple cryptocurrencies, the safest thing is to do it with $ USDT. For example, a stable cryptocurrency whose price is always worth 1 US dollar. If we use known and reliable platforms, we can get 10% per year for stake this stable cryptocurrency, with daily interest payments. If we resort to flexible staking, this rate is around 5% per year as well.
These returns could be multiplied if we take full advantage of the world of decentralized finance or to-be. In this ecosystem, there are other investments in addition to cryptocurrency staking, such as providing liquidity to an exchange (platforms that offer the service of buying and selling cryptocurrencies). This process of providing liquidity, depending on the needs of each exchange, could offer us much higher rates, reaching approximately 25% per year in dollars, without increasing our exposure to risk.
On the other hand, if we want to seek greater exposure to risk, we can find stakings of up to 90% per year and also platforms that offer 4% daily for simply providing liquidity. These interest rates are higher, since there is a greater exposure to risk.
In any case, it is essential to know how cryptocurrencies work in order to understand 100% how interest is generated both for providing liquidity and for staking cryptocurrencies.
Analista Crypto en N&W Professional Traders
