Are you a crypto investor? Then, you must be aware of the term ‘staking.’ Similar to yield farming, staking is one of the methods of earning passive income from cryptocurrency. It allows users to administrate the crypto ecosystem. However, there a still a few misconceptions about crypto staking that should be changed as soon as possible. Let us explain!
Misconception #1- You need more money to do staking If you don’t know already, a trader should have a minimum of 32 ETH to be nominated as a validator in Eth2.0. Also, becoming a validator isn’t so easy. You will require dedicated hardware with an industry-level internet connection. That is why many users will choose a third-party staking-as-a-service provider connecting their wallet to the staking pool directly.
Misconception #2- Yields are constant and uniform Depending on the staking pool, your outcomes will vary. The pool operator and the validators will charge a commission that differs based on the pool you choose. Some will have high rewards, while others will have lower ones.
Moreover, the quality of the staking pool also matters. Your crypto performance will decrease if your chosen system doesn’t have proper validators. So, you must cross-check the reputation of the staking pool before deploying your coins.
Misconception #3- You need exemplary skills There are many points of entry in staking your cryptocurrency. However, you need not bear all the pressure on yourself. Instead, you can simply hand over the work to either an exchange or a staking-as-a-service platform.
Entry points:- Becoming a validator Using an exchange to handle the tech side Getting help from a staking-as-a-service platform to connect your wallet to the staking pool
Apart from the first option, the other two were so common. As a staking-as-a-service platform will have high-level skill and hardware, it will take care of the staking process on behalf of the user.
On the other hand, using an exchange platform will allow you to deposit crypto for staking. For that, the platform will charge a certain amount as a service fee. Alternatively, you can get the assistance of a blockchain expert to develop your exchange using the best cryptocurrency exchange development services.
Misconception #4- Staking does not vary between cryptocurrencies Let us explain this misconception with this example. We have several Proof-of-Stake (PoS) blockchains in the crypto market, such as Ethereum 2.0, Polkadot, and Cardano. Even though all these blockchains have the same consensus mechanism, the staking rewards they offer will not be the same.
Finally, we conclude with the hope that you have got some useful information about top misconceptions about staking.