What is crypto staking?
As a way to contribute to a blockchain network, crypto staking involves locking down your cryptocurrency for a period of time. Players can then reap the rewards in the form of more cryptocurrencies.
Crypto staking is derived from the Proof of Stake (PoS) consensus algorithm, which is a less risky and more energy efficient blockchain verification method, compared to the Proof of Work (PoW) algorithm.
Since cryptocurrency staking is a relatively new idea, it is not supported by all blockchains. However, if you hold cryptocurrencies that use the PoS consensus, you can take advantage of that and stake your holdings to earn rewards.
Crypto staking gives you the opportunity to earn more of the same cryptocurrencies you currently own. There is no sophisticated mining tool needed to stake the crypto – only a stable internet connection and a computer are needed.
The rewards earned vary depending on the amount of crypto you wager, so if you wager more crypto, your rewards will increase.
Can I bet on Binance?
Binance offers a staking service called Locked Staking.
Locked staking requires you to lock in the coins you want to bet for a certain period of time to earn rewards. During the wagering period, your cryptocurrencies will be locked and you will have no access to these coins until the end of the wagering period.
What can I bet on Binance?
Binance currently offers staking for these coins:
How to start staking on Binance
Step 1: Navigate to the Locked Staking category on the Binance Earn page
Click on “Binance Earn” and choose the staking option in the “Locked Staking” category.
Step 2: review the crypto you want to bet
On this page you can find the list of coins available to bet, the duration of the bet, the minimum locked-in amount and the potential rewards to be won. Select the coin of your choice and click on “bet now”.
All information relating to the staking of this part will be displayed. Enter the amount you wish to bet on and the process is complete! Keep in mind that there is a minimum bet amount for all coins and if your balance is less than the stated amount, you will not be able to participate in Locked Staking.
How long does it take to use Locked Staking on Binance?
Binance allows locked coins to be reassigned to your account the day after the redemption process is completed. However, due to time zone differences, this transfer process can take up to 72 hours.
If you wish to redeem your staked cryptocurrency prior to the wagering period, note that you will lose part of the rewards earned as the rewards will be deducted from your allocated assets.
Can You Lose Money Throwing Cryptos?
Staking, like any other form of investing, comes with its own set of risks. Before you start staking, make sure you understand the unique terms and conditions of staking for any project that interests you.
While your cryptocurrency holdings won’t disappear overnight, here are a few risks you should be aware of before you stake:
- Blocking period
With staking, it is necessary to “lock” your coins for a period of time. This means that you will have no access to your holdings and will not be able to perform transactions such as withdrawals during the wagering period in order to receive the rewards.
Cryptocurrency is undoubtedly a volatile investment. Prices are constantly fluctuating and you can expect sudden rises and falls while your coins are staked and you might not be able to sell your holdings. If you are in the long run, these fluctuations can be ignored as the focus is on the rewards at the end of the betting period.
There are fees you need to pay depending on the staking platform you choose, so pay attention to these before you start staking.
I understand the staking now, so what about the savings?
Savings and staking work essentially the same way for investors, where you lock coins in order to generate rewards. However, with staking, coins are locked directly to the protocol and staking rewards are generated from the validation of transactions. For savings, the coins are locked in with the exchange and the exchange uses it to generate rewards for the savers.
How does saving on Binance work?
There are currently two savings options offered by Binance:
The flexible savings feature is where you can earn interest on cryptocurrencies held on the platform, with the freedom to deposit and withdraw your holdings at any time and the rewards paid daily. The Locked Savings feature is where you will get paid after the ‘Lockout’ period ends.
A minimum savings amount is required for locked and flexible savings options, depending on the type of coin chosen. So make sure you have enough coins in your wallet to start saving with Binance.
For blocked savings, you have the freedom to move the coins to your flexible savings account before the end of the blocked term. However, in doing so, you will lose all accrued interest.
Before placing your coins in the locked savings account, make sure that you will not need to use the coins until the end of the term to enjoy the rewards.
Another useful feature on Binance Savings is the automatic subscription feature. The automatic subscription feature will allow funds from your spot portfolio to be transferred to the savings account of your choice at a specific time.
Two redemption options are available for flexible savings:
Quick Redemption – Redemption will be completed instantly and interest earned on the same day will be forfeited.
Standard Redemption – The redemption process will be completed the next day so that you do not lose any interest earned for the day.
To wrap up
The advantage of staking and saving on Binance is that it opens up a lot of possibilities. Users can assess all the alternatives available on the site, as well as the level of risk they entail.
High rewards are generally associated with high risk, while a low percentage of interest-bearing investment alternatives is low risk. While flexible savings choices offer incentives on a daily basis but at a low rate of return, locked-in savings or staking would generally offer a higher rate of return when you complete the “lock-in” term.
Venture into these options to see which one suits your financial goals and enjoy the returns!
Regiena is a banker, avid reader and part-time freelance writer, currently exploring the field of blockchain technologies.