When it comes to increasing the number of cryptocurrencies we hold, the most common thing is to take a dynamic role: buy new cryptocurrencies with fiat or expand our portfolio through swing trading. However, there are ways to get returns passively and one of the most popular is staking, which we tell you all about in this video:
Being able to multiply the cryptos we own may sound like scams, but it isn’t. The proliferation of blockchain networks with the “Proof of Stake” protocol has made the preservation of cryptocurrencies like this a reality. Basically these networks need their own tokens to function; especially to check transactions.
By staking you can achieve an annual return of more than 10% in certain cryptocurrencies
It is the users who lend their cryptos to the network (which are blocked during the borrowing) and therefore receive a reward in the form of more cryptos. The reward is proportional to the number of cryptos used, but currently and in the main networks (such as Kusama, which also supports Parachains, or Polkadot) it is higher than 15% in the network itself and higher than 10% in exchange.
Staking, as explained in the video, can be done directly from the blockchain network that supports this protocol (which is usually somewhat complex) or from an exchange. Given the profitability of staking, many exchanges offer this option in a very simplified way for a commission. The return on investment is less, but it is the exchange that does all the work, so it is a very easy way to get started with this method.
If you have a long-term strategy of not touching (or swapping, selling, or withdrawing) cryptos and our portfolio allows for staking, this is one of the best ways to work with cryptocurrencies.