What Is Crypto Staking?
Crypto staking involves locking up your cryptocurrency to support the operations and security of a blockchain network. In return, you can earn staking rewards, making it a way for long-term crypto holders to grow their assets. However, staking is only available on blockchains that use the Proof of Stake (PoS) system, like Ethereum, Solana, Cardano, and others.
How Does Crypto Staking Work?
When you stake your cryptocurrency, you’re helping verify transactions on the network. Here’s a simplified look at how it works:
Validators: PoS networks select validators based on how much cryptocurrency they have staked and how long it’s been locked.
Transaction Verification: Once selected, validators verify transactions and add them to the blockchain.
Rewards: As a reward for their work, validators (and you, if you’re staking) earn additional cryptocurrency.
Types of Staking
Depending on your experience and the amount you want to stake, there are several staking options:
Solo Staking: Run your own node. This gives you the most control but requires technical knowledge.
Exchange Staking: Some exchanges offer staking services, making it easier for you to stake without managing the technical aspects.
Delegated Staking: Delegate your coins to a trusted validator, allowing them to stake on your behalf.
Staking Pools: Pool your crypto with other investors to increase your chances of earning rewards without the need to run a node.
Benefits of Staking
Earn Rewards: Staking allows you to earn additional cryptocurrency while holding onto your existing coins.
Support the Network: By staking, you help secure and maintain the blockchain network.
Energy-Efficient: Unlike mining, staking uses far less energy, making it an eco-friendly way to support crypto networks.
Risks of Staking
While staking can be a great way to earn passive income, it comes with some risks:
Market Volatility: If the value of the cryptocurrency drops significantly, your rewards may not cover the losses.
Slashing: Validators that act maliciously or fail to maintain their node can lose a portion of their staked funds.
Centralization Risk: If a few validators control most of the staking power, it can pose security risks to the network.
Third-Party Risk: When using third-party services like exchanges, you are trusting them with your funds, which can involve security risks.
Can I Start Staking Crypto with Caleb & Brown?
At Caleb & Brown, we do not provide direct staking services. This is because we prioritise the security and custody of your assets, ensuring that they remain safely under our control rather than involving third-party providers. However, clients can withdraw their assets to their personal wallets if they wish to participate in staking independently.
While staking can be a great way to earn passive rewards, it often requires using external platforms or delegating control to other entities, which can introduce additional risks. To ensure the highest level of protection for our clients, we focus on secure asset custody and do not engage with third-party staking services.
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