For those who are uninitiated, there are different types of blockchains for different cryptos. The most famous is of course proof of work. Basically these cryptos depends on huge amounts of computation power to create blocks (ledgers) and help secure the network. Popular proof of work blockchains are Bitcoin, Litecoin and Monero. There is yet another mechanism called proof of stake. These are different from proof of work as they are dependent on the amount of cryptocurrency you “stake” in order for the user to “mine” blocks. In most cases, the more tokens you hold, the higher the chance you get to “mine” a block. In other words, to get the most reward you will need to have a lot of coins in the first place. The advantage is that it is supposedly “green” as you won’t need the energy consumption as for proof of work.
Staking is a good source of passive income as well. They will usually require the “staker” to add into a staking pool a certain amount of tokens which will be held in the pool for a fixed amount of time. For direct ADA (Cardano) staking however you will not be able to take out your coins from the pool until the staking period is over. So please beware.
As I usually hold most of my cryptocurrencies in Binance [referral link], I will show you how to get into staking in that exchange platform. Note that you can of course stake your ADA in the official Cardano wallet called Daedalus Mainnet or their lightweight web wallet Yoroi. Go to your spot in Binance and on the right click on Earn. You will be presented with the “Locked Staking” option. Click on that.
Scroll down till you find the ADA token and choose the duration. In most cases, the shorter the duration, the higher the APY (aka returns). However this means that you will need to come back often to do staking once the staking period is over. As you can see for the 15 day staking period, the estimated APY is 17.79%! Not too bad if you ask me. But do note that sometimes the staking pool will be full so you will not be able to stake the 15 days duration if you miss the opportunity as it can be very popular. And as the 15 days staking interest is so much higher than the 30 days interest, sometimes I wait for a day or so to check if there are any availability in the short period pool slot. So if you are ready to stake, click on Stake Now. But before you do that, make sure you understand that if you redeem earlier, you will lose all the interest you have accrued. Yes so please be sure before you do any staking.
Once you ensure that everything is fine, tick their service agreement and then confirm purchase. Not too sure why it is called an “purchase” but I am guessing it is a “slot” to purchase. Anyway you are done. It should start earning rewards the next day. A gentle reminder that the APY is an estimate only. Should always be prepared that there will be some fluctuations in the rewards. This is crypto anyway. The crypto market is known to drop drastically when Elon Musk sneeze or the Chinese government goes and ban Bitcoin for the 50th time.
If you are interested in maximizing passive income returns on your cryptos, you should take a look at the list of those staking in Binance as well. Some of the APYs are quite good. Sometimes when the market is down and I have some spare stablecoin available, I will scroll down this list and see which tokens are giving me the best returns from staking. If you were to look at the above example, Matic is giving a 43.29% APY for the 15 day staking period! However at the moment the slots are sold out. But how about ATOM? That is 34.47% staking APY returns! This is what I call a nice passive income. But not exactly as you will need to come back 15 days later and do another round of staking if there are available slots.
May the passive income gods bless your returns many fold! If you are looking for a guide to start buying your first crypto on Binance, it is available on my blog here. Or if you are interested in my other passive income strategies?