Crypto locked staking- should you try?: Have you got crypto holdings in PoS coins, say ADA or DOT? Do you have plans for long-term HODLing? Well if you don’t have aspirations to trade your holdings anytime soon, you can try crypto locked staking. Locked staking in crypto extends a smart way to make some extra earnings with your idle coins. There are several crypto exchanges that offer crypto locked staking services, added to trading. The earnings from staking or locked staking (staking rewards) is calculated as APY or Annual Percentage Yield. Depending on your chosen coin or token, you might earn around 35%+ APY from leading crypto locked staking platforms. Check out more at Multibank.io.
So, what is crypto locked staking exactly? Well, to know that first you need to have a clear idea on crypto staking.
Staking is exclusive to proof of stake blockchains. Crypto was introduced with Bitcoin on a Proof-of-Work blockchain. The PoW blockchain follows a process called mining to verify new blocks and mint new coins. But, PoS blockchain executes the verification through a process called staking. The staking process is less energy-intensive and more eco-friendly than mining.
In staking, the PoS blockchain needs the help of crypto holders. If you agree to stake, you will be requested to deposit a certain number of cryptos to the blockchain to help the latter in the verification process. When you deposit your coins for staking, the blockchain will lock-in the coins for a certain period of time. You cannot withdraw the coins once you deposit them for staking before the completion of the staking period. In exchange, the blockchain will reward you with interest or staking rewards.
It’s to mention here that your level of staking rewards will be decided based on multiple factors- the coin/token you choose for crypto locked staking or any staking process, the staking type you choose, the number of coins you are willing to allot for crypto locked staking or flexible staking, and the staking duration.
The more coins/tokens you are willing to allot for crypto locked staking or any type of staking- and the longer you are ready to keep the coin locked up, higher will be your reward.
What is crypto locked staking?
Now, some crypto exchanges offer stakers to choose from two types of crypto staking modes as per their convenience- locked and flexible.
In flexible staking, the lock-in restrictions are more relaxed. It means your coins will stay locked-in but you will have this “flexibility” to withdraw them even before the completion of the staking period, if needed.
Now, let’s talk about crypto locked staking. It’s just the exact opposite of flexible staking.
In crypto locked staking, you cannot withdraw your staked coins before the completion of the staking period. After the staking period is over, the exchange will automatically send the crypto locked staking coins straight to your wallet (spot wallet).
You will always receive higher staking rewards if you opt for crypto locked staking over flexible staking. It’s because, with locked staking, you provide the guarantee that you won’t withdraw the coins before the staking period, come what may. As mentioned before, the blockchain needs fuel from the staked coins to complete verification of new blocks before adding them to the existing chain. Now, if you withdraw the coins in the middle of the staking period, the entire verification process might get a jolt. But, if you agree to crypto locked staking, you will help the blockchain to enjoy a seamless staking procedure. Thus, the PoS blockchains always offer higher staking rewards for crypto locked staking.
Variable lock-in period
If you opt for you will usually have the window to choose from a wide range of staking periods. Leading crypto exchanges allow stakers to choose from either 90 days or 60 days, or 30 days lock-in period for . This way, you can start with the 30-day period first and then gradually extend to a longer period, if time permits.
It’s to note here that the reward will depend on the duration of your chosen period. For example, you will always receive higher rewards if you go for a 90-day period than if you had signed up for a 30-day timeline.
While offers great advantages and assures handsome passive income, it carries a certain risk level as well.
The problem with is that it demands you to keep your holdings locked-in for a fairly long period of time. Now, what if the market takes an upswing in between? As you know, crypto is an extremely volatile industry and can shoot up or plummet down in just a few days. You might have plans for long-term HODLing but won’t you desire to explore trading if suddenly find a great price? You will, at least, “want” to. But, if your coins are you will lose the entire window to explore a sudden upward swing.
Yes, you will have the staking rewards to keep things right. But, still, staking rewards, no matter how high, might not be able to replace the shooting profits you could incur with sudden high surges in the crypto market.
However, that doesn’t mean that you won’t sign up for locked staking. The risk mentioned here is not intended to dissuade you from making the most of the locked staking benefits. Rather, the idea is to keep you informed so that you can land up with an educated and strategic decision with locked staking.
Smarter idea would be to save a mid-sized amount of crypto holdings for the service. The other part of the holdings can be kept in wallet or else can be offered for flexible staking. This way, even if you want to trade in between the staking period, you won’t have to withdraw the coins saved for locked staking. So, it’s like a win-win for all.