The first time I got into business for myself, I was in real estate. At that time I was studying investors like Robert Kiyosaki, Grant Cardone, and Brandon Turner because I like the idea of buying a property, helping people with a place to live in and generate income from it. Having your money work for you instead of working for your money is the way I will achieve financial freedom. Though it’s called passive income, you still work for it. You’re running a business, there’s no way around it.
In crypto you can also generate passive income in the form of APY% from staking (delegating or in the case of Tezos, baking).
Not all tokens will generate income, you have to do some research and find those that offer staking rewards and also find the platforms you think is right for you.
So what is staking?
Staking is simply buying some crypto, and you hold them until you decide to sell them. There are different ways to earn APY this way so don’t skip your due diligence. Different tokens and platforms offer different incentive rewards.
Keep in mind that in most cases when you stake, you are letting someone else hold your crypto for you. You won’t be in full control of your funds during the staking period. The company can go offline. The company can be forced by government authorities to shut its doors and not allow withdraws. And protocols are vulnerable to hacks. Even those who have been audited have a risk, for example with the Akropolis hack.
When you stake, it has to be money you are willing to lose. That being said, not all coins that are “stakeable” will be successful. Another thing to keep in mind is that these coins are at the mercy of Bitcoin. What do I mean by this? Altcoins generally don’t have a USDT pair to trade on. Instead they get paired against bitcoin in satoshis. If Bitcoin drops in USDT price, obviously the value of the satoshis will decline in dollar value. If bitcoin drops in value, people will sell their altcoins to get bitcoin and then transition to a stable coin usually USDT to preserve their capital. You don’t want to hold altcoins during a bear market. They’ll get rekt and you’ll lose all your money. But this also presents a great buying opportunity for the tokens that preform well to sell later or hold long term.
Unlike real estate rentals, in crypto you can generate passive income without tenants and paperwork but you are still subject to do your own research because if not, then you’ll lose all your money. There’s always a risk like the company going MIA or the protocol being hacked. Just be smart with the decisions you make and diversify your risk to keep it at a minimum.
Tokens can generate anywhere from 1% – 30% (at least this is the highest APY% from staking that I’ve seen so far)
I think it’s best to convert your staking rewards into ethereum or bitcoin. I would choose these because they have been tested through time and are still here. You can hold the coins too, and sell at a higher value. Just make sure the market conditions are right for whatever decision you make.
Where do I stake?
Platforms like Coinbase allow you to stake Tezos and Cosmos for about 3% – 5% APY. As soon as you buy them, you’ll see your earnings increase in real time. They are paid daily after a certain amount of time or you have to claim the rewards when you want.
Crypto.com allows you to earn interest not only on these but a wide variety of other cryptos including bitcoin and ethereum. Most coins aren’t stakeable at the protocol level but cyrpto.com takes your crypto for a certain amount of time and you get paid every week. But then again you are trusting a thrid party will remain solvent and won’t go MIA.
You can also send your crypto to your ledger and delegate your assets to someone else who will pay you your rewards. They get a percentage in fees but ultimately I’d say it’s better than keeping your tokens on Coinbase. Though the token options are limited to stake, it’s still better because you can get your crypto back at any time.
To stake you can also go directly to the protocol and delegate your assets to someone on their network. Some protocols like DOS Network take 7 days to withdraw your assets so make sure you plan accordingly and plan to start the withdraw process before you need the funds.
These are just a few of many ways to get started with staking. I advise you to proceed with caution and encourage you to continue your research now that you have an idea of what it is. Though it’s new and risky, it’s a good way to earn interest you can’t get anywhere else.
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