In the new generation of Proof of Stake (PoS) protocols, like Cardana, Avalanche, Fantom, Mina, etc., staking is validating transactions on the blockchain. Remember, old generations of Currencies like Bitcoin are based on Proof-of-Work (PoW), and Ethereum is transitioning from PoW to PoS.
For staking your Cryptocurrency Coin, you are rewarded with a staking reward. This is a way to let your holding work, and besides the (hopefully) advance in your investment prices, you also earn an interest rate for locking up your investment.
There are different ways to stake your Tokens. One can do it on crypto exchanges or staking platforms like Binance, Kraken, Coinbase, Celsius, Nexo, or BlockFI. This way is the easiest, but maybe not the most secure way.
Is staking risk-free?
As already mentioned in my article 7 ways how to make money with Cryptocurrencies, the risks are low, but staking is not risk-free.
There are different kinds of risks; one is that you usually have a lockup period if you stake your coin, which means if the markets are crashing, you may not be able to sell your investment on time. If you believe in your projects and hold for the long term, that should not be a big problem. Those lockup periods can go from a couple of days to a year.
If you are holding your coin on an exchange and stake it there, the exchange can get hacked, or there is a security breach, and you lose your coins. Remember, not your key, not your coin.
It also can happen that the staking wallet gets hacked or your validator is not paying you for some reason.
One way to lower your risk to a minimum is using your private hardware wallet or software wallet as a staking wallet for your digital currency. You can use your Ledger or Exodus and, with some tricks, also your Trezor cold wallet to stake some coins.
Staking on Trezor wallet
Unfortunately, Trezor One does not directly support staking. What you can do, is to link your Trezor Model T Device or Trezor One wallet to a staking pool or validator. One example of such staking services is AllNodes.
You can also connect your Exodus wallet Application and use it as a staking interface. You can generate staking rewards through the Exodus rewards app.
At the moment you can stake:
- Algorand (4,69 % APY)
- Solana (6,55 % APY)
- Cosmos (9,67 % APY)
- Cardano (4,91 % APY)
- Ontology (21,43 % APY)
- Tezos (5,66 % APY)
- Vechain (1,45 % APY)
💡 The annual percentage yield (APY) is the real rate of return earned on an investment, taking into account the effect of compounding interest.
If you want to stake Cardano (ADA) with your hardware wallet, you can connect it with the AdaLite Wallet and stake your digital assets there. The good thing here is that it is also very safe since neither the stake pool provider nor AdaLite has access to your funds. You need to keep your private keys in a secure offline place.
Here at Stakingrewards you see an overview of the most profitable coins to stake. The reward is always also on the lockup period you choose.
The Stakingrewards can vary a lot and are also changing over time.
If you do not trade and hold your favorite digital currency for longer and are not staking, you are just leaving free money on the table.
The options for a user of Trezor hardware device who wants to stake their assets are a bit limited. There are a couple of workarounds on how to stake your crypto assets and still have a significant amount of security in place.
For beginners, it is easier to start staking on the Cryptocurrency Exchanges mentioned above. If you have more experience and are staking more significant amounts, I suggest starting to do it on cold storage like the Trezor or Ledger wallet.
Check out my full review on Trezor Model T and Trezor One.
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