Staking has become a huge in crypto in the past year and is a great way to earn some extra cash. I do worry that a lot of people do not understand the risks they are taking and how to choose how to stake.
Here’s some general advice:
1. Understand the different between staking and lending. Not all platforms that pay you interest are staking as in the proof of stake. Many are just lending out your crypto like a typical bank. This is not necessarily bad, but you should know which you are signing up for.
2. Not your keys, not your crypto. There are a lot of platforms that offer staking/lending rewards right now. Just because they do, does not mean you should. Research the platform before sending them crypto. Do they seem reputable? Is there a risk of them going under, rug-pulling etc.? Sometimes a small return is not worth moving the money off a wallet you control.
3. Understand the terms/acryonyms around lending. For example what does APY mean? Does the terms of the staking earn you compound interest?
4. Not all platforms offer the same rewards. If you have a coin you want to stake, look around at a few platforms. I’ve seen variability of 3-4%. A lot of people use Coinbase because it’s easy but their rates are often a little lower than Kraken for example.
5. Understand if you are locking funds up and make sure you don’t need them if you are. [Crypto.com](https://Crypto.com) has a lockup period (typically 3,6,9 months etc.). Pretty much all Ethereum staking is locked up until the merge, which may not happen for a year (or longer, but hopefully Q1 2022).
6. Don’t stick with holding a coin, just because you are staking it. I’ve had some slow moving coins that I’ve wanted to sell but waited a long time because I was earning a few percentage points. Crypto moves so fast, sometimes it’s not worth it.
7. Consider decentralized staking/lending. Depending on the coin, there are a lot of good options with smart contracts.
8. Consider lending stablecoins. The rates right now are pretty good and you don’t have to worry about the price dropping, unless something catastrophic happens (avoid tether!).
9. For God’s sake, if you own ADA stake it from a wallet you control. Delegated staking is the easiest thing in the world.
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