Earning Money by Staking Coins



When it comes to staking, you have two major variants available. The first option is to stake yourself while the second one is to delegate a validator (via a smart contract) which will stake on your behalf.

No matter which alternative you choose, in the end, they all work on the same principle. By holding coins in your wallet (i.e. staking) you have invested a certain sum into the network and thus support it. For that, you are granted the chance to create blocks and receive rewards for your service. Not only do you help keep the blockchain secure, you also prevent attacks and the higher number of stakers there are, the higher the decentralization is. The drawback of delegated Proof-of-Stake (DPos) networks, however, is that they suffer from centralization and as such, I would not recommend them.

Whichever option you choose though, the network will reward you based on a pre-defined set of rules that take into consideration the amount of coins you have, their age, maturity, etc. In the upcoming section, I’ve covered in detail the ways of optimizing your chances of winning a reward, which include joining a Staking Pool and using Coin Control.

WAYS TO OPTIMIZE YOUR INCOME

There are a lot of factors determining your staking rewards – from coin age, through network weight to the blockchain of the coin and different tweaks that might increase your chances of making money quicker. Regardless, there are several things to consider that are applicable for each coin in order to maximize the frequency of getting rewards.

Staking Pool

Some networks require a lot of coins to be staked before you are eligible for a reward. Staking pools are one solution in that case. They are built around the idea of combining staking capacity from many users to increase their chances of being eligible for a block reward. Nevertheless, staking pools are risky and should be avoided when possible. A good rule to protect yourself – if a certain staking pool is not recommended by the coin’s team, be mindful and think twice before choosing it.

Coin Control

Whenever you stake your coins and receive a reward, the address you staked with is split into two addresses if you’ve staked 1000 coins and there is a fixed reward of 2 coins you will end up with two addresses with 501 in each, then if you continue staking with one of those 501 addresses they will, in turn, be split to two 251.5 addresses and so on. Coin control allows more advanced setups to be performed to the wallet you are staking with – specifically – to manually split or combine addresses.

1. SPLIT ADDRESSES:

Split addresses are all about splitting the coins from one address in smaller portions to optimize reward frequency and earn more money. Every time you successfully stake, the coin age of those coins is reset to 0 and you must wait for the coins to mature again before you can stake. By splitting addresses, you optimize that waiting time for the coins to mature to put it simply. The trick here is to find the golden middle between reward eligibility and staking time.

2. DUST COLLECTION:

Let’s go back to the example above. You successfully stake your crypto coins, the address is split to two blocks, then the process repeats, and the splitting continues until at some point you end up with tens or hundreds of addresses with little coins in each of them. This is where dust collection comes into play. The idea of it is to combine those smaller addresses into one or a few bigger ones, combine their reward odds and stake with those one or few big addresses instead. Now, having 1000 or 500 coins seems like enough to stake with on their own but imagine having 1.37, 3.56 and 8,07 coins. In that case, dust collection starts to make more sense and combining all 12 coins into one address and staking with it will be the smart thing to do.

*Disclaimer: Dust Collection is not an official term but since this practice does not have a dedicated name, I coined the phrase Dust Collection.

0 Response to "Earning Money by Staking Coins"

Post a Comment



BUY AND SELL CRYPTO


binance---- mxc---- paxful---- remitano

Iklan Atas Artikel

Iklan Tengah Artikel 1

Iklan Tengah Artikel 2

Iklan Bawah Artikel