HOW TO MAXIMIZE CRYPTO INVESTMENTS WITH BINANCE STAKING
13/07/2022
By Damilola Ogungbayi olushola
Table of contents:
- What is Staking
- What is PoS Staking
- What is Defi Staking
- Benefits and Risks Associated with Staking?
- How Can Binance Staking Help?
- Features:Auto Staking
- Use Binance for More Than Just HODLing and Trading
- Conclusion
WHAT IS STAKING
There isn’t just one kind of staking.
There are multiple places you can deposit your coins
and begin staking to earn rewards. However, the most
common ways are through a network’s consensus
mechanism or a DeFi protocol.
1.PoS Staking
Proof of Stake (PoS) is a less resource-intensive
alternative to Bitcoin’s Proof of Work (PoW)
consensus mechanism. Users deposit their
crypto funds in a smart contract to perform
various network functions (such as validating
transactions). In return, they receive staking
rewards. The stake incentivizes the
maintenance of the network’s security through ownership.
2.Defi Staking
Staking in the DeFi world lets you stake your
coins in return for rewards. Among other things,
you could stake your coins in a liquidity pool to
provide liquidity, or you could stake in a
protocol’s reward pool. DeFi staking offers a
huge range of opportunities depending on your
risk tolerance.
WHAT ARE THE BENEFITS AND RISKS ASSOCIATED WITH STAKING?
While earning interest on your crypto holdings is
incredibly attractive, don’t forget there are risks
involved. Like any investment, understanding these
risks will help you make more informed decisions on
how you stake your tokens and coins.
1. Slashing
Slashing is a common risk on PoS blockchains.
If a PoS blockchain validator fails to validate
properly, both the validator and the delegators
could lose part of their staked tokens or
rewards. This is the case if the validator has downtime or double signs on the network.
2. Malicious attacks
Wallet attacks and scams are common in the
decentralized space. When users stake theirtokens themselves, they should understand the
risk of dealing with external wallets, platforms, and actors.
3. Technical requirements
Some blockchains have complicated technical
requirements for those who want to stake in
their consensus mechanisms. An incorrectly
set up wallet may lead to a user’s loss of assets
due to improper configuration.
4. Unsustainable tokenomics
It’s essential to carefully investigate tokenomic
models and also understand that your
fiat-value returns can vary with the market.
Token values can fluctuate greatly and are
subject to high market risk. You may lose some or all of your investment.
HOW CAN BINANCE STAKING HELP?
To help combat some of these risks, Binance staking offers some protections to users. However, there will always be risks associated with any form of staking, even through Binance.
Slashing Risk: Binance Staking takes on all slashing risks for users. This promise means that the same amount of tokens that a user staked will be returned to them. However, the fiat value of the staked tokens may fluctuate, and you may have no recourse for any losses.
Wallet Attacks and Scams: Binance users reduce their risk significantly of wallet attacks, scams, or theft when operating through a centralized exchange like Binance. Without needing to move funds yourself or manually stake, you can let Binance perform these tasks for you.
Technical Risk: Binance Staking provides simple, one-click-to-stake functionality for 100+ cryptocurrencies. You can also quickly receive, remove, or reinvest your staking rewards without any complex technical knowledge.
BINANCE STAKING INTRODUCES AUTO-STAKING FEATURE & REBATE ON EARLY REDEMPTION
Fellow Binancians,
Binance Staking is introducing the Auto-Staking feature, which allows users to automatically add their digital assets/digital currencies to the staking pool again at the end of the staking period. Users may enable the Auto-Staking feature before the Interest End Date by clicking Wallets > Earn > Locked Staking > Auto-Staking.
Notes
- The new staking position created by the Auto-Staking feature will include the initial staking amount only. Distributed rewards will not be automatically added to the staking pool.
- A new staking position will be created via Auto-Staking when the initial staking period ends. Users may disable Auto-Staking any time before the Interest End Date.
- The Auto-Staking feature will not create new staking positions for Locked Staking products if the product has already reached the maximum Locked Staking limit.
USE BINANCE FOR MORE THAN JUST HODLing AND TRADING
While Binance cannot remove all the risks associated
with staking, there are several tangible benefits if you
choose to stake through our platform. As always, you
can significantly reduce your overall risk by making
more informed investment decisions.
CONCLUSION
Proof of Stake and staking opens up more avenues for anyone wishing to participate in the consensus and governance of blockchains. What’s more, it’s an utterly easy way to earn passive income by simply holding coins. As it’s getting increasingly easy to stake, the barriers of entry to the blockchain ecosystem are getting lower.
It’s worth keeping in mind, though, that staking isn’t entirely without risk. Locking up funds in a smart contract is prone to bugs, so it’s always important to DYOR and use high-quality wallets, such as Trust Wallet. To get started click on the link below
