What Is Crypto Staking and How to Do It on Coinbase
It’s hard to have a conversation these days about cryptocurrencies without mentioning staking. There’s a good chance you’ve heard someone say “I stake Cardano (ADA)” and wonder what staking is and if you should do it, too.
That’s because crypto staking is quickly growing in popularity as investors look to new methods of making their money work for them through passive income.
Which is understandable… I mean, if you could make money off your crypto without doing anything, wouldn’t you?
Of course you would.
So to help you get started, we’re going fill you in on what staking is, how you too can stake your crypto, and how it benefits you.
Today, we’ll be covering:
- What staking is…
- How to stake on Coinbase…
- And which tokens you can currently stake on Coinbase.
Let’s jump right in at the beginning…
What Is Staking?
Chief Crypto Strategist Nick Black gave a rundown on what staking is and how you can use it during a recent American Institute for Crypto Investors LIVE stream, which you can check out here:
Only the cryptos that use proof-of-stake (instead of proof-of-work) will allow you to stake. By staking your coins, you’re helping to make the blockchain more secure from attacks and process transactions faster.
During the time you stake your coins, you can’t touch them until a certain amount of time has passed, so if you want to stake, you should do it with a crypto that you want to hold for a while.
As a reward for allowing your cryptocurrency to be used, you earn more of the staked crypto as interest for helping the network out. Talk about a win-win!
While the concept of staking can be a bit tricky, the easiest way to understand it is that your cryptocurrencies are helping a network operate, and you’re rewarded for that.
One platform on which you can stake certain cryptocurrencies is Coinbase.
Here are some things you’ll need to know before staking your crypto:
- Set up your account on Coinbase unless you already have one.
- Verify your identity. You’ll need a form of ID for this.
- Take some time to go over the user terms and agreements regarding the crypto that you want to stake.
- You’ll be able to maintain total control of the crypto that you choose to stake, although you may be required to have it staked for a minimum amount of time.
- You will be allowed to maintain some crypto that you can trade with outside of staking but will most likely come with some limitations.
- While you will receive a staking reward, Coinbase clients will have to pay a small ‘service fee’ on their rewards. While this isn’t ideal, if you don’t have any plans on moving your coins around, then this is a small price to pay.
So, now that you’ve decided to stake on Coinbase let’s take a look at what’s available to you…
What Tokens Can You Stake on Coinbase?
Here are the cryptocurrencies that are currently available for staking on Coinbase:
Ethereum (ETH), Algorand (ALGO), Cosmos (ATOM), Tezos (XTZ), Dai (DAI), and USD Coin (USDC).
To learn more about the staking options available on Coinbase, the company created a helpful page that shares everything you need to know before staking any cryptocurrencies on their platform.
Here’s what we covered today:
- The basics of staking…
- How staking works on Coinbase…
- And current tokens to stake on Coinbase and what percentage of returns they offer.
Coinbase isn’t the only platform where you can stake crypto, and the cryptocurrencies listed to stake on Coinbase isn’t every crypto that can be staked, far from it. However, as nearly everyone that is involved in crypto has a Coinbase account, we decided to start here.
But we wanted to provide everyone with the information that Coinbase does allow staking as it’s an exchange that many first-time cryptocurrency investors use.
To your investing success,
The American Institute for Crypto Investors Research Team