How Can Crypto Staking Help You Earn Passive Income

Jun hao
Jun 4
4 min read

Capturing passive income through crypto staking has quickly emerged as a favorite among users, given how volatile the cryptocurrency world can be. Staking is a less risky strategy compared to other methods of earning passive income, and presents immense opportunities for wealth building. However, what makes staking a cryptoasset simpler to understand than other active trading strategies? What makes do frames earned through staking constitute swap income?

What Is Staking A Cryptocurrency?

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In simplest terms, staking a cryptocurrency means storing a token or crypto in a certain blockchain and locking it on a network which utilizes a Proof of Stake, or similar consensus (PoS) mechanisms) or proprietary model. In the process of doing this, you receive rewards, normally in the same tokens that you have pledged as security. Rewards can include transaction fees or portions of new coins generated.

The process of staking is a core element in many chains like Ethereum 2.0, Cardano, Solana, and Polkadot. In such chains, staking is crucial for maintaining the level of decentralization and securing a public network. Therefore, the accumulation of your assets in participating chains will serve to the give you returns that constitute passive income for the longer term.

Benefits of Staking

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Crypto staking is not just about earning rewards—there are several other major benefits that can make it an attractive option for investors:

Passive Income Stream Staking offers a reliable passive income stream, especially for investors who do not want to trade or don't have time to monitor market movements on a continuous basis. The rewards earned by you are in terms of additional tokens, which accumulate over a period of time.
Capital Retention Unlike trading, where you must sell your holdings to realize the profits, staking does not need you to sell your holdings to realize returns. Your capital is not disrupted while your staked coins earn rewards.
Lower Risk, Steady Rewards Compared to the risks involved in active trading, staking offers a more predictable and stable return. With staking, you’re not subject to the extreme price volatility that affects active trading, especially when market conditions are unpredictable.
Eco-Friendly Alternative A majority of PoS blockchains such as Cardano and Ethereum 2.0 are extremely energy-efficient. Unlike Proof of Work (PoW), which uses enormous amounts of computational resources to validate transactions, PoS is much more eco-friendly, and therefore staking is a great choice for those who want to invest responsibly.

What Are the Risks?

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While staking offers several benefits, it’s important to recognize that it does come with some risks, and being aware of these risks can help you make an informed decision.

Lock-Up PeriodsSome staking options require you to lock up your tokens for a set period, making it impossible to access or sell your assets during market volatility. If the market crashes, your funds are still locked in.
SlashingIf the validator you’ve delegated your stake to acts maliciously or goes offline, a process known as “slashing” may occur, where a portion of your staked funds is penalized. This is a risk of delegating your stake to a validator you may not fully control.
Platform RisksIf you are staking through a third-party platform, such as a centralized exchange, you face the risk of the platform’s failure. This can expose you to security breaches or operational issues that could jeopardize your funds.
Market VolatilityWhile staking rewards are typically stable, the underlying token price can still be affected by market conditions. Even if you earn consistent rewards, the value of your staked assets may decrease if the market price drops.
Liquidity RisksWhile some platforms offer liquid staking, not all networks provide this option. When staking without liquidity, your tokens may be locked for extended periods, preventing you from capitalizing on sudden market opportunities.

Not Into Lock-Ups? Consider MyITS for Passive Income

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If you prefer not to lock your assets or manage staking, there’s another option: MyITS. While staking can be an effective way to earn passive income, MyITS offers an alternative solution for those who seek a more hands-off approach without the complexities of staking or trading manually.

MyITS is an automated trading platform that uses sophisticated algorithms to execute spot and futures trades for you. It doesn’t require any staking or long-term lock-ups, providing liquidity and flexibility. Here’s how MyITS can help you:

Hands-Free Trading: Automated trading in the cryptocurrency market without the need for manual intervention.
Risk Management: Built-in risk controls that adapt to market conditions, helping protect your investment.
Diversified Strategies: Benefit from both short-term profits and long-term growth with MyITS' dual focus on futures and spot trading.

Whether you’re a crypto novice or an experienced investor, MyITS offers a passive income solution without the need for staking or locking your crypto assets. This allows you to stay flexible while still earning returns from the crypto market.

Disclaimer

The content in this article is for informational purposes only and should not be considered as financial or investment advice. Crypto assets involve risks, including potential loss of capital. Please conduct your own research or consult a qualified financial advisor before making any investment decisions.