Staking a crypto asset like AVAX is a means of earning passive income. Staking might be a new term or very familiar to you, regardless, in this guide, we will be looking at the Avalanche blockchain as it helps us understand the token better. I will be discussing staking and Avalanche Wallet as we learn how to stake Avax on the Avalanche Wallet.
What is Avalanche?
Avalanche was created by a group of anonymous developers who wanted to make a privacy-focused cryptocurrency that could be used as a currency or store of value. Initially launched in December 2018, the token was not listed on any exchanges until January 2019.
The Avalanche network consists of more than 40 nodes spread across different regions worldwide, which helps keep it secure from potential attacks and malicious activity from inside or outside its network. The Avalanche blockchain can also process transactions per second (TPS).
Avalanche is a decentralised, trustless and anonymous proof-of-stake (PoS) protocol that enables private transactions to take place on public blockchains.
The Avalanche protocol utilises the masternodes as a trustless layer of security to ensure that no malicious transactions can happen on the network. This master node system ensures all users have an incentive to participate in the network and keep it clean.
The Avalanche protocol is based on the Waves platform, a blockchain platform that offers a wide range of features, including smart contracts, tokenisation, and fiat gateways. The Waves platform also has its own DEX (decentralised exchange), which offers cross-chain interoperability with other blockchains such as Bitcoin, Ethereum, Litecoin, etc.
The Avalanche protocol uses an anonymising network called “Snowflake” that sits between the blockchain and its users. This network takes the transaction requests from users and sends them to Avalanche’s nodes. The Snowflake network then sends the transaction results back to the user, who can then use their wallet as usual.
Avalanche also has its own privacy coin, Avalanche Coin (AVAX). You can stake AVAX with Avalanche Wallet using this guide.
Avalanche Wallet is an open-source, decentralised, non-custodial cryptocurrency wallet that supports over 1,000 cryptocurrencies. It is available for Android, iOS and web browsers.
The wallet was launched in June 2018 by a team of developers who wanted to make a secure, private and easy-to-use cryptocurrency wallet. Avalanche Wallet is based on the Atomic Multi Wallet Protocol (AMP) developed by Thomas Voegtlin, who is also known as the creator of Electrum.
The AMP protocol allows users to access their crypto holdings from multiple wallets at once via their own keys. In addition to this feature, Avalanche also offers users the ability to export their private keys for other wallets such as MyEtherWallet (MEW). This feature makes it easier for users to manage multiple wallets at once without having to worry about losing access to any of them because of lost passwords or misplacing any of your private keys (which can be a nightmare if you are not careful).
What is Staking?
Staking is a way to earn interest on your crypto assets. You do this by locking them up in a wallet and keeping them safe. The longer you keep them in your wallet, the more interest you get.
Staking is also referred to as Proof of Stake (PoS). It’s a more environmentally friendly alternative to Proof of Work (PoW), which uses a lot more electricity than PoS.
Proof of Stake is often used by coins that want to be more environmentally friendly and have lower transaction fees than other cryptocurrencies. However, it is not just about being green; it can also be very profitable.
Staking secures a blockchain network by validating blocks and receiving rewards in return. It is basically earning interest by holding a cryptocurrency rather than selling it or trading it on an exchange.
Further down this guide, I will show you how to stake AVAX on Avalanche Wallet and why it is a good idea to do so.
Why Should You Stake AVAX?
The cryptocurrency market is constantly changing, and with that change comes new opportunities for investors. If you have been investing in cryptocurrencies for some time now, then you must be aware of different ways to earn passive income. One such method is by staking coins in a wallet where they can be unlocked after a certain period or milestone has been achieved.
Staking tokens allows users to earn more tokens by participating in the network validation process. For example, if you have 10 AVAX tokens in your wallet and you stake them for two months. At the end of that period, your stake rewards are calculated based on how many coins were staked for that period (i.e. if 20 people were staking 10 AVAX each during that same time). The amount of reward given out will depend on how much work was done by each person.
Therefore, if you are looking to support the AVAX ecosystem by holding the tokens for some time, staking is just what you need to do, as you will earn passive income while supporting the growth of the network.
Staking AVAX with the Avalanche Wallet
So how can you stake at least 25 AVAX and earn 11% APY in a very secure way? Below are the steps for delegated staking on the Avalanche Wallet.
- First, download and install the AvalancheWallet app from Google Play or iOS App Store.
- Once you have downloaded the app, create an account by entering your email address and choosing a password. You can also set up two-factor authentication (2FA) by scanning the QR code displayed in the confirmation email sent after creating an account. Once this is done, click the “Create Account” button at the bottom of the screen.
- Next, click on the “Add Asset” icon in the menu bar at the top left corner of your screen to add AVAX tokens in your wallet. Select “AVAX” from the list of supported tokens.
- Click on ‘Earn‘ in the left menu in the Avalanche wallet.
- Staking can be done on the P-Chain, so you must transfer your AVAX first.
- Enter the amount of AVAX you wish to transfer(Cross Chain Transfer)
- Click the ‘Transfer‘ button.
- Select a validator out of the list of ‘nodes to delegate.’
- Specify staking period and stake amount
- Confirm the details. AVAX delegated staking should start immediately
Now you have learnt what Avalanche is and how to stake its native token. You can get started with earning staking rewards. Feel free to tell me how helpful this article was or what you would have liked to be included.