What Is Crypto Staking?
Staking is the process of holding cryptocurrency to earn rewards in the form of additional crypto. By participating in staking, you help secure and operate the blockchain network associated with that cryptocurrency.
Key Benefits:
- Passive income generation.
- Supports blockchain security.
Can You Make Money Staking Cryptocurrency?
Yes! Staking offers a way to earn passive income. Your earnings depend on:
- The amount staked.
- The duration of staking.
Example:
- Stake $10,000 in ETH at 5% APY → Earn $500 annually.
- Reinvest rewards for compounded growth.
APY (Annual Percentage Yield) reflects your annualized return.
How to Stake Ethereum (ETH) at Firi
Steps to Create a Staking Account:
- Navigate to My Holdings in the Firi app.
- Select Crypto Staking.
- Follow the guide to confirm terms.
To Stake ETH:
- Choose existing ETH or buy more.
- Select the staking amount.
- Confirm the stake.
- Funds transfer to your staking account, and rewards begin accruing.
Supported Cryptos: ETH, ADA.
Which Cryptocurrencies Can Be Staked?
Only proof-of-stake (PoS) blockchains support staking. Examples:
- Ethereum (ETH)
- Cardano (ADA)
- Solana (SOL)
- Polkadot (DOT)
Why Not Bitcoin?
BTC uses proof-of-work (PoW), which relies on mining instead of staking.
Proof-of-Work vs. Proof-of-Stake
| Feature | PoW (Bitcoin) | PoS (Ethereum, Cardano) |
|-----------------------|-----------------------|--------------------------|
| Energy Use | High | Low (99.95% less) |
| Validation | Mining | Staking |
| Speed | Slower | Faster |
Key Insight: PoS is more energy-efficient and scalable.
Staking Returns and Risks
Potential Earnings:
- Varies by crypto and market conditions.
- ETH staking APY: ~3–7%.
Risks:
- Lock-Up Periods: Funds may be illiquid.
- Volatility: Crypto prices fluctuate.
- Slashing: Penalties for malicious actions (rare).
Mitigation: Firi replaces slashed assets (excludes protocol bugs/hacks).
Pros and Cons of Staking
✅ Advantages:
- Passive income.
- Eco-friendly vs. mining.
- Governance participation (for some blockchains).
❌ Challenges:
- Price volatility.
- Minimum staking requirements.
- Platform fees (e.g., Firi’s 25% commission on rewards).
Tax Implications
- Staking Rewards: Taxable as income (value at receipt).
- Capital Gains: Applied if sold at a profit.
Tip: Track taxes via Firi’s Tax Calculation tool.
FAQ
1. Is staking safe?
Yes, but risks include volatility and lock-up periods.
2. How often are rewards paid?
Depends on the blockchain (e.g., daily, weekly).
3. Can I unstake anytime?
Some cryptos impose lock-up periods; others allow instant unstaking.
4. What’s the minimum staking amount?
Varies by platform (e.g., ETH: no minimum on Firi).
5. Why choose PoS over PoW?
Lower energy use and faster transactions.
6. Are staking rewards guaranteed?
No—rewards depend on network activity and validator performance.
Final Tip: Only stake what you can afford to lose, and diversify your portfolio.