What the heck is staking? - Crypto in Plain English – Episode 27 - by cryptohunt.it

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

Today: What the heck is staking?

Staking is the process of locking up tokens you own within a blockchain network, and getting rewards in return. It's an easy way to generate passive income with your crypto holdings.

Staking is similar to putting money into a savings account and earning interest.

The concept is crucial in blockchains that use "proof of stake", because only participants with staked tokens are trusted to validate transactions, and then allowed to collect the associated rewards.

If you don't want to run a validator yourself, which often involves installing software on a server, you can delegate your tokens to those who are. In return, you'll still get proportional interest payments.

But there is risk! You often have to stake your tokens for a specific amount of time, which means you can't take them out to sell or swap. If the token price decreases while you are staking, you might end up losing more money due to that, than the interest can make up for. On the flip side, if you intended to hold the token, that may not be a problem for you.

And next time we'll give you an overview of the most popular ways to create more passive income with crypto.

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.