To start receiving passive income in cryptocurrency, you do not need millions of investments, expensive equipment and electricity. All you need to do is download a crypto wallet and follow a series of simple steps – the Trustee Wallet team will give detailed instructions on how to make money on cryptocurrency staking!
Staking: what is it
Probably, many of you have heard that cryptocurrency can not only be bought (received as payment for labor, as a gift, inheritance…), but also mined. In most cases, the process of mining cryptocurrency is associated with mining – the process of creating new blocks in the blockchain network based on complex and expensive calculations. Mining works on the Proof-of-Work (PoW) algorithm.
But there is an alternative way to get new coins – forging based on the Proof-of-Stake (PoS) algorithm – proof of ownership.
Thus, staking is a fairly simple and cheap way to get passive income for holding coins on an address. We will talk about this method of obtaining cryptocurrencies – staking.
History and background of staking
The idea of staking was first proposed by Bitcointalk forum participants in 2011 as an alternative to energy-intensive PoW. In staking, the process of signing a new block on the network does not depend on the computing power of the equipment involved in the mining, but on the amount of cryptocurrency in the account of the participants.
Blocks are signed with approximately the same probability, and by the participant whose current balance of coins is larger. For example, a participant who owns 2% of the total number of coins will confirm new blocks in the network in proportion to their share.
The first working PoS protocol was introduced in PPCoin in 2012.
How it works
So, as we found out earlier, the process of mining new coins – forging – in staking occurs when participants form a new block. Large coin holders are elected to the role of super representatives and receive the right to form new blocks in the network for a reward in the form of new coins and network fees. The more coins a super representative holds, the more blocks he can sign and the more rewards he will receive. In most cases, the distribution of the forging queue between super representatives occurs randomly, while maintaining the right of each to sign blocks in the amount of his share of coins held.
Varieties of staking
During its existence, the Proof-of-Stake consensus algorithm has been widely used. The developers made their own changes to it, designed to increase the scalability of the network and eliminate the possibility of hard forks, double spending and 51% attacks.
To date, the following main types of PoS can be distinguished:
- Proof-of-Stake running on the classic blockchain . The validator of the next block in the network is chosen by random combinations and depends on the size of the bet.
- DPoS. This consensus mechanism was developed to address the problem of network scalability. And it has proven to be effective. The principle of DPoS (Delegated Proof of Stake) is based on the democratic choice of about twenty validators (super representatives) to validate blocks. Voters who vote for validators receive a percentage of their profits.
- LPos (Leased Proof of Stake) . This kind of algorithm allows small coin holders to “lease” their coins to large validators and receive more frequent rewards.
How to choose a coin to stake
In fact, there is no universal answer to this question. The list of coins that support staking already has several hundred and is constantly expanding. And before deciding to place your assets in a particular coin for staking, we recommend that you carefully study it.
There are resources on the Internet that allow you to analyze the profitability of staking, changes in the price of a coin, the number of staked assets, and much more.
How much can you earn on Staking
There are resources on the Internet that allow you to analyze the profitability of staking, changes in the price of a coin, the number of staked assets, and much more.
At the time of this writing, about two hundred coins and tokens have been created, allowing you to earn on staking from 0.17% to 387% per annum. The top five assets are represented by projects such as
- Cardano (ADA)
- Polkadot (DOT)
- Avalanche (AVAX)
- Ethereum 2.0 (ETH)
- Algorand (ALGO).
How to make money staking Tron (TRX) – step by step guide!
Making money staking crypto with Trustee Wallet is easy. The wallet integrates the Tron blockchain with TRX staking.
Any user of the Trustee crypto wallet can earn passive income by staking their thrones. Here’s information on how you can earn on staking the throne with Trustee Wallet.
To participate in staking, you need to take just a few steps:
- Install the Trustee Wallet app and top up your balance with TRX coins.
- Go to the Tron (TRX) tab and go to the staking menu by clicking on the coins icon in the lower right corner of the screen.
- In order to stake TRX, select the desired option: Bandwidth or Energy by clicking on one of them.
- Enter the number of coins you wish to stake.
- Next, click the “Freeze” button.
Please note that it takes 14 days to unfreeze and withdraw TRX from staking.
6. The application will display a notification about the successful operation.
7. The staking reward is calculated every 6 hours and will be displayed in the relevant section. To withdraw the reward, click the “Withdraw” button. The withdrawal of the reward is available 1 time per day.
Yield Overview
How much does throne staking charge? At the moment, the annual percentage yield of TRX is between 5% and 9%. To calculate the profitability of staking Tron we have a calculator – just enter the amount of TRX you want to stake and it will show the annual, monthly and daily earnings.
What is Energy and Bandwidth?
In simple terms, Bandwidth and Energy on the TRON network are resources that are needed to complete transactions. These resources appear on the wallet address when staking TRX coins and tend to be restored within 24 hours.
Each transaction requires certain resources, for example:
- For transferring TRX, signing messages, freezing/unfreezing coins, etc. transactions use Bandwidth.
- To interact with smart contracts — sending tokens, exchange operations for DEX, etc. — Energy is consumed.
In the event that there are not enough resources in the address to complete the transaction, the blockchain will burn TRX as payment for the network fee. In the absence of TRX and/or resources, transactions will not be possible.
For example, the USDT TRC-20 token (Tether on the Tron blockchain) is also a smart contract, and when working with it, both Bandwidth and Energy are required. If there are not enough resources, the blockchain will burn TRX to pay the network commission.
Therefore, if you often use Tether on the Tron blockchain, then we strongly recommend stocking up on TRX coins to pay for network transaction fees. On average, one USDT TRC20 transaction consumes 31895 – 64895 Energy, which is 13.74 – 27.6 TRX at the time of publication. For a detailed calculation, you can also use the calculator.
However, a more profitable option would be to freeze 4500 – 6000 TRX for Energy. In this case, you will have enough Energy to make 1-2 free USDT TRC-20 transactions per day. Additionally, you will receive a reward for staking (~5% per annum).
Freezing more TRX for Energy increases the amount of resources received and, accordingly, the daily number of free token transactions.
With any staking option, be it Bandwidth (Bandwidth) or Energy (Energy), you will be rewarded in the form of additional TRX. The larger the frozen amount, the higher the staking reward.
How to withdraw TRX from staking
The procedure for withdrawing coins from staking is similar to freezing, to do this, follow these steps:
1. Go to the Staking tab.
2. Press the “Defrost” button on your steak.
3. In the opened section, specify the defrost amount.
4. Click “Unfreeze”, after which a notification will appear about the successful operation to unfreeze the coins.
5. The corresponding transaction will be displayed in the history, where the date of withdrawal of coins to the wallet will be indicated.
6. After 14 days , the steak will be unfrozen online and can be withdrawn to your address. To do this, click the “Withdraw” button at the top of the screen and the coins will become available for use.
What are the risks of staking
Despite constant improvements in the PoS consensus algorithm, the possibility of collusion by validators still remains, leading to a network hard fork, a 51% attack, double spending, and more. It is also very important to study the conditions for unfreezing assets. The term can be from several days to months.
During the staking period, the price of an asset can sharply go into a correction, and the conditions for unfreezing an earlier deadline can deprive all accrued interest. Finally, there is a huge difference where your coins will be stored – under your control or you will transfer them to third parties for storage. Together, these factors affect the degree of risk when staking.
Pros and Cons of Staking
| PROS | MINUSES |
| Staking is a fairly promising way to earn coins, compared to the risks inherent in mining (the cost of buying equipment, maintaining it, paying electricity bills, withdrawing equipment by order of government agencies, etc.). | When making a decision on staking, we recommend that you study all the available information as thoroughly as possible. It is advisable not to transfer control over the coins, but to freeze them at your address, delegating only the right to vote. Also, carefully study the rules for unfreezing assets, the procedure and terms for paying remuneration. |
The Trustee Wallet team carefully studies all issues related to staking, choosing the most secure and profitable options for its users. The list of coins for staking in the wallet will be updated with new ones. Stay with us and get profit.
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