Crypto staking takes on a number of formats but gets its original name from the proof-of-stake consensus mechanism that some cryptocurrencies today utilize. Proof-of-stake coins are said to be more energy-efficient and rightfully better reward those who own the largest share of the supply.
But because staking has become an increasingly popular way to generate passive income, it has expanded to take on a number of unique forms. There are now ways to achieve group staking, and staking has become a larger part of the decentralized finance landscape, that simply refers to locking up coins in some way.
Regardless of the methodology, crypto staking is an ideal way to make money beyond investing and trading alone, but it comes with a variety of pitfalls as this guide will explain. In addition, we are exploring how an upcoming software solution from licensed DLT developer Covesting could solve the current challenges facing the industry today.
Ways To Make Money With Crypto Beyond Investing And Trading Alone
The average person who first gets involved in cryptocurrency often starts their journey with buying Bitcoin, Ethereum, or Litecoin from a popular cryptocurrency exchange. When they notice the wild price swings and characteristic volatility that crypto offers, the next question is how to make money trading cryptocurrency.
A natural progression from there is considering other passive income streams, either through some type of cryptocurrency referral program such as what is offered by PrimeXBT, or through a crypto buzzword that is only further exploding in popularity due to the hype surrounding the Ethereum 2.0 upgrade.
That buzzword or phrase, is crypto staking, and it starts with a proof-of-stake consensus algorithm.
Crypto Staking Versus Mining Explained Via Bitcoin And Ethereum
Bitcoin was the first-ever cryptocurrency created by Satoshi Nakamoto. The mysterious person or group solved the double spend issue that prevented past attempts at creating a digital form of cash. They achieved this through a consensus mechanism called Proof-of-Work. In this setup, advanced machinery solves complex mathematical equations. The more powerful the machines, the more hash power produced and more likely the user is to receive a reward in BTC.
Thousands of cryptocurrencies have since been created, such as Ethereum. Ethereum offers a variety of key differences from Bitcoin which give it a unique position in the crypto market. For example, Ethereum smart contracts allow other coins to be built on top of it, along with the ability to run decentralized applications.
Proof-of-Stake coins like Ethereum instead rely on staking coins to act as a validator node. The more coins a validator holds, the more likely they are to receive the reward. Without the requirement of complex machinery, proof-of-stake coins are said to be much more energy-efficient and have since gained popularity over Bitcoin.
Proof-of-Stake Spills Into DeFi, Automated Market Making, More
The term staking lends well to other cryptocurrency based products and services, especially around the world of DeFi. For example, users can stake coins and lock them up within contracts to provide liquidity to trading pairs on automated market making platforms like Uniswap. As is the case with validator nodes, users who are staking coins and providing liquidity receive a reward for doing so.
Validators receive fees from the network and transactions themselves, while those who lock up tokens in liquidity pairs are receiving fees generated by the automated market making platform. These fees rise and fall along with general market supply and demand, which provides those taking advantage of the solution with a variable APY.
An APY is an annual percentage yield and is the variable interest rate generated in crypto rewards in exchange for staking or locking up tokens as liquidity.
Staking COV Tokens Within The Covesting Ecosystem
Users can also stake certain tokens, such as the COV token to unlock a variety of benefits activated by the utility token. Depending on the total amount of COV tokens locked up, users of the Covesting copy trading platform can access additional account level discounts, and ways to increase ROI. Covesting is a peer-to-peer copy trading module that connects strategy managers with followers to make money together side by side. Staking COV tokens let users get the most out of the experience.
For example, strategy managers can get a trading fee discount and raise total follower caps, while followers can increase the profit share and eliminate new following fees. Staking tokens in this way, also offers an additional benefit that will be activated when the Covesting Yield Account system arrives this quarter.
Staking COV tokens will also increase the already high APY rates within Covesting Yield Accounts by as much as 2x. Joining a waitlist within the PrimeXBT dashboard will also earn users another 1% boost for up to 35% interest on idle crypto assets.
Moreover, the Covesting Yield Account system does away with the clunky and overly technical requirements needed to connect wallets to DeFi protocols and access passive income opportunities. Instead, it is all done through the Covesting module which connects users directly to top DeFi protocols.
Any idle crypto token ranging from BTC, ETH, USDT, and USDC can be staked in a few clicks. The same coins are offered as base currency for margin accounts on the PrimeXBT trading platform, where the Covesting ecosystem currently lives as part of a B2B partnership.
Covesting Yield Accounts To Change The Game For Crypto Staking
Covesting Yield Accounts are set to debut later this year, and when they do there will be more ways to generate income under one roof than ever before. There is buying BTC or other coins, CFD trading on forex, crypto, stock indices, commodities and more, copy trading, a four-level referral program, and soon, Covesting Yield Accounts.
Combined, any investor or trader has all the tools at their disposal to become profitable and take advantage of the ongoing market volatility. Volatility like this only comes once in a lifetime, making the current conditions a once in a lifetime opportunity. Using crypto staking as one of many ways to make money is the fastest way to success.