If you have been looking for a way to make your cryptocurrency work for you by generating more of itself without having to buy any more coins, then staking crypto may be a good option for you.
Cryptocurrency staking is basically about lending your digital currency to a blockchain network in exchange for rewards. The practice is currently available on many Proof-of-Stake (PoS) blockchains, such as Ethereum 2.0, Cardano, and Tezos. In this article, we will explain what cryptocurrency staking is, how it works and which coins you can stake on the Binance cryptocurrency exchange.
What is Binance?
Binance is an online cryptocurrency exchange that allows users to buy and sell digital/cryptocurrencies using traditional fiat currencies like the US dollar. Founded in 2017, it has quickly turned into one of the most popular exchanges on the market because its user interface is super friendly and easy to navigate plus it has a wide selection of cryptocurrencies available for trading on it.
Binance is a centralized type of cryptocurrency exchange (although there is a recent launch of Binance decentralized exchange, as it aims to give us the best of both worlds) with its native token called Binance coin, BNB. It offers numerous services ranging from hot wallet storage to an online academy.
Is staking available on Binance?
Yes, Binance has now started supporting staking for a few select coins on its exchange and in this section, we will be looking at what crypto staking is, the staking options available on Binance, and how it is done.
About crypto staking
Staking cryptocurrency has emerged as an alternative to mining cryptocurrencies, it involves locking up a certain amount of your cryptocurrency in a wallet or with a staking provider in return for rewards. It is similar to interest-earning on a fiat currency that is deposited in a savings account.
Crypto staking works best with PoS blockchains, which don’t rely on miners to validate transactions and reach consensus on the blockchain. Instead of miners, these blockchains use validators to perform these functions and validate new blocks added to the blockchain’s ledger.
Unlike crypto mining, which requires expensive specialized hardware to be profitable, crypto staking can be done using relatively cheap computers or even mobile devices.
Types of staking on Binance
There are mainly 3 types of staking options to choose from on the Binance exchange platform. They have locked staking, DeFi staking, and ETH 2.0 staking.
1. Locked Staking
In Binance Locked staking, you lock your crypto assets for a fixed period. This period for locking up assets varies, so instead of just holding your assets in the Binance crypto wallet you can stake them and earn, which also contributes to the general functioning of the blockchain network.
2. DeFi Staking
Here you stake in DeFi (Decentralized Finance) projects to deliver financial services to users through smart contracts. It is very important to point out at this point that these projects also come with high risks, therefore research thoroughly before staking with the Binance DeFi Staking option.
3. ETH 2.0 Staking
The main objective of Ethereum 2.0 is to make Ethereum more sustainable, scalable, and secure. This upgrade is split into three parts with staking being an important part. It encourages users to support the network by earning rewards when they do so.
Steps to staking crypto on Binance
- Log into your Binance account or create one for free if you don’t have an account yet. Download the Binance app for ease of navigation. Remember to fund your Binance wallet at this point, if it is not already funded
- Navigate to the home page, click on Earn
- Select Locked staking if you are opting for DeFi or locked staking; otherwise, select ETH 2.0 staking
- Choose your cryptocurrency of choice from the list of ones available for staking on the platform. Confirm lock periods available and percentage interest for staking that particular asset
- Select the duration you prefer and click on the Stake now option
- Enter the amount/quantity of the crypto asset you want to stake. At this point, make sure to select an amount only within the minimum and maximum stake amount required for that asset
- Click on the services agreement for staking on Binance. Once you agree with the terms and conditions therein, check the box and hit the confirm button.
How do I unstake locked staking on Binance?
- Navigate to the Binance homepage and click on ‘login’ in the top right corner of your screen. You will be directed to a page where you can log in to your existing account or create a new one.
- After logging into your Binance account, go to the ‘Earn’ tab as earlier instructed in the previous section of this article. Navigate to locked staking.
- To unstake, you need to have staked at least one coin in your account. Find the coin you staked and click on it
- You will see a pop-up page where you can choose to unstake the locked asset. Just click on the unfreeze button as indicated.
- Click on the confirm button, to confirm your selection.
Is staking crypto worth it?
Crypto staking is very beneficial to cryptocurrency investors and the blockchain ecosystem as a whole. It is environmentally friendly as staking crypto consumes minimal energy as compared to crypto mining, and also reduces the amount of water used for cooling in mining as no high computational power is required.
Staking crypto helps the blockchain network to process transactions more efficiently while helping to provide high security to the system and make frauds negligible.
In all, staking crypto has become one of the best ways for investors to earn a decent amount of interest with very little capital as they only need to purchase a crypto asset (for as low as 10 dollars worth depending on the minimum requirement). It is worth considering for HODLers who want to grow their investments over time without having to take the risk of trading or spending acquired crypto assets.
So, yes, staking cryptocurrency is worth it.
Can you lose money staking on Binance?
It is possible to lose money staking on Binance exchange. Every stake may not always earn you the expected interest. This happens when the price of the crypto asset falls. For instance, an investment of 100 dollars to get 1,000 coins that are staked for 10% interest, if the price of the asset falls to 7 cents from 10 cents at the end of the staking period, you will be left with 1,100 coins worth $77 which is less than the $100 you invested.
This of course makes no difference for an investor that is out to hold the digital asset for a long period; he just waits for a price correction. This is the main reason why thorough research has to be done before choosing a cryptocurrency to stake.
Binance is a centralized exchange and so is their staking platform. This means that if you stake coins on Binance and the platform gets hacked, you will lose all of your coins. This equally happens if you stored them on the exchange wallet.
Yes, you can lose some money (not all) when staking cryptocurrency on Binance but the risks are the same even when you are holding cryptocurrency in a Binance wallet, idly.
Staking on Binance offers several benefits for anyone looking to grow their holdings. It is an easy way to make passive income through cryptocurrency, a simple process with almost no hassle. The staking rewards may be small, but they add up over time, and it is certainly a great way to turn small profits into bigger ones over time as you hodl.
So again, before you choose to start staking on Binance, keep in mind that it is a risk and you may want to take other factors into consideration. Consider that there are many different coins with different staking plans, do your research before you start any projects.
Hopefully, this article has been able to explain how to stake coins on Binance and has answered any questions you may have had. If something has not been covered here or you would like to add additional information, please do not hesitate to use the comment box.