Crypto staking is a form of earning cryptocurrency simply by holding it. It is made possible by the structure of the blockchain. As every transaction on the blockchain requires verification – this rewards-type system helps users who have cryptocurrency to verify transactions and support the network essentially earn crypto.
Staking crypto has emerged as a highly popular way to earn investment income in the cryptoasset markets. However, like all types of investing, staking does not come without its risks and precautions.
In today’s article, you will discover the most common Cryptostaking mistakes to avoid , this will help you get crypto staking right from the start.
1. Not choosing the right asset(s)
When making the decision to stake crypto, it is important to choose the right asset or assets to stake. Like with any other investment, you need to conduct thorough research on the assets you would like to hold to stake.
It is advisable to look at factors such as:
- Whitepaper (Tokenomics)
- Validator’s commision and track record,
- APY of the network, lock time of the funds,
- Market capitalization and trading volume (to gauge liquidity),
- Historic price development,
- Quality of the developer team or community,
- Track record in meeting roadmap milestones,
- How the project fares against competitors, etc.
2. Not understanding the technical requirements
While the general concept of staking is the same for every PoS coin, the actual staking process differs from blockchain to blockchain. As a result, it is important to fully understand the technical requirements and process involved in the digital asset you would like to stake. Requirements might be as follows:
- Where to buy the tokens and transfer to staking wallet,
- How to stake,
- How to choose a reputable validator, etc
Should the technical requirements of the asset you would like to stake be too challenging for you, then maybe it would be a better option to choose an easier-to-stake asset.
3. Don’t lock up coins in staking that you need to be able to sell quickly
Several stakable assets come with lock-up periods (e.g 21 waiting period, etc. ) during which the staker cannot sell , transact his or her coins. Therefore, it is advisable not to stake coins that you need to (or want to) be able to sell quickly.
Staking is really meant for asset that you intend to “HODL.” Therefore, you should be able to keep these coins or tokens locked up as your stake for a long period of time – ideally, several years.
4. Not staying updated on all the changes
The cryptocurrency world has changed over the years, and they have introduced many new updates that people must stay up to date on. As a delegator, it is important to follow their social platforms closely in other to stay up to date with changes and recent happenings. There are also new wallets, exchanges, and many other new ideas that may be introduced as time goes on, which you need to stay informed on.
CONCLUSION
If you have idle crypto investments growing dust somewhere, take the time to research options and look into staking them. As always though, please do your own research and weigh up your risks and take good precautions in other to get the best of your investment.
ABOUT 01NODE
As a current validator on many major PoS networks, 01node has the expertise and time tested infrastructure to be a highly secure and reliable node. Our existing validator nodes have secured value on several POS networks since their inception such as Terra, Iris, Cosmos, Kava, E-money, IOV, Solana, Secret Network, and others who will soon launch like Polkadot, Certik chain, and Near Protocol. Collectively, we currently secure nearly $160M in user-staked assets.
We aim to provide the best performance and reliability through our physical infrastructure collocated in tier-3 datacenters. Our track record shows this reliability, and the great focus we have on security and best practices for every service we offer.