Is Staking The Next Big Thing In Cryptocurrency Investing?

Is Staking The Next Big Thing In Cryptocurrency Investing

In recent years, cryptocurrencies like Bitcoin have exploded in popularity among investors looking for new ways to potentially grow their money. While many have simply bought and sold coins for profit, a newer method called “staking” has emerged that allows crypto holders to earn rewards on certain coins just for holding them in a compatible Bitcoin wallet or on supported exchanges and platforms. But is staking poised to become the next major trend in crypto investing? There are several key factors driving adoption that suggest it may play a bigger role going forward.

What Is Cryptocurrency Staking?

Staking refers to the process where cryptocurrency holders can earn recurring rewards on certain “proof-of-stake” coins by holding them long-term and participating in transaction validation on the blockchain. It essentially allows you to earn interest on coins you were planning to hold anyway, with typical annual percentage yields ranging from 5-12% depending on the asset and staking platform. Leading proof-of-stake cryptocurrencies like Polkadot, Cardano, and Solana can all be staked to earn Yield.

To stake coins, they are transferred into a compatible wallet and essentially locked up or held as collateral while they are put to work validating transactions. As an incentive for providing assets and helping validate blockchain activity, stalkers earn a percentage yield on their holdings. The coins being staked are still owned entirely by the staker and remain under their control in their private wallet.

Why Is Staking Becoming More Popular?

There are a few key reasons why staking has started catching on among crypto investors:

Higher Yields than Traditional Savings Accounts

With interest rates on cash savings accounts paltry at best, staking provides significantly higher yields averaging 5-12% APY depending on the asset and platform used. This allows long-term holders to grow their assets faster.

Incentivizes Holding Crypto for the Long Term

Why Is Staking Becoming More Popular

Staking encourages investors to commit assets for longer periods to earn rewards, which contributes to the security and activity of proof-of-stake blockchains. This helps decentralize networks further aligning network participants’ goals.

Easy Passive Income Opportunity

Once assets are committed to staking they earn rewards automatically with no effort required by holders. This makes it appealing for hands-off investors.

Growing Number of Proof-of-Stake Cryptocurrencies

As the world’s second-largest cryptocurrency, Ethereum transitions to proof-of-stake consensus in 2023, even more assets will be available for staking as the technology is adopted broadly.

Is It Risky? Understanding The Drawbacks

While staking yields are enticing, putting assets at stake does come with some drawbacks to consider:

Locking Up Assets

Staked coins are typically locked up for a set period ranging from a month to a year or longer. This reduces liquidity during that timeframe. However, many platforms do allow you to terminate stakes early if needed.

Technical Risks

Is it Risky Understanding the Drawbacks

Like many aspects of crypto, staking comes with technology risks as protocols and platforms could contain bugs. Conducting due diligence is key to protecting your assets.

Changes in Yield Rates

APY rates can fluctuate regularly based on the number of participants, crypto market conditions, and the value of the assets being staked.

How Can You Get Started with Crypto Staking?

If you hold supported proof-of-stake coins and want to start taking advantage of staking yields, there are a couple of standard options:

Staking Pools or Exchanges

Many top exchanges allow staking directly on their platforms with some not even requiring you to take custody of your coins. While simple and low risk, their yields tend to be lower than 5%.

Individual Staking

You can also stake yourself directly on the blockchain of supported coins. This requires taking custody using a compatible hot or cold Bitcoin wallet, but it unlocks higher yield rates of around 5-20% APY depending on the asset & amount staked. It also contributes more directly to decentralizing networks but requires being more hands-on.


With high yield rates relative to other assets, incentives for long-term holding, and a growing proof-of-stake ecosystem, staking offers exciting benefits for cryptocurrency investors willing to commit their funds to help participate in and support blockchain networks. While risks exist, for long-term investors staking provides options to grow their holdings. As more assets transition to proof-of-stake consensus, staking through secure Bitcoin wallets or trusted platforms seems poised to see significant growth in adoption among crypto holders.