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What is Staking in the Cryptocurrency Market?
Participating in staking requires running a node. It can be run by anyone but the node owner, and must lock a specific amount of coins to start staking. Running a node allows stakers to contribute to the blockchain network directly, but this option requires specific technical knowledge of the blockchain network. If users don’t have this knowledge or don’t want to run their own node, they can delegate their coins to the node owner, making the process of supporting the blockchain network much easier. So when you participate in staking with CEX.IO, it looks like delegation of your coins to CEX.IO to receive staking rewards.
What is Proof of Stake (PoS)?
In proof of work, miners create new blocks by solving complex mathematical puzzles. In proof of stake, a network uses a specific algorithm to select stakers for adding the latest batch of transactions to the blockchain. The network chooses validators based on the size of their stake and the length of time they stake coins. The longer and larger the amount of coins staked, the more chances that your staking node will be selected to bring value to the network. For its work, stakers receive a staking reward paid in cryptocurrency. The exact implementation of staking varies from network to network but, in most cases, users need to lock a specific amount of coins to become a staker.
Does Staking Work Like a Bank Deposit?
But the staking concept works in a completely different way. While staking, you earn rewards by running a staking node or by delegating your coins to the node owner. Whoever you delegate your coins to, these funds are used only for increasing the so-called staking power of the node. The higher the staking power, the greater the node’s weight in the blockchain decision-making process. It affects the chances of receiving staking rewards.
The staking reward percentage is determined in the coins you stake, not in the fiat value of these coins. Since crypto prices may fluctuate, you may benefit from both staking rewards and cryptocurrency appreciation. In another case, the staking rewards may dampen the impact of downward movements.
How does staking work on CEX.IO and how do you start?
To start participating in staking with CEX.IO, just hold coins that are available for staking on your CEX.IO balance. We will do the rest! No additional actions are required to earn staking rewards.
You will earn staking rewards as long as “stake-able” coins are stored on your CEX.IO account. Staking rewards are distributed automatically to your CEX.IO balance. With such automated balance replenishment, your balance gets bigger with each distributed staking reward, empowering you to earn more coins in the next staking period.
Follow a few simple steps if you don’t have stake-able coins on your CEX.IO balance and want to start staking:
- Sign in to your CEX.IO account.
- Deposit or buy tokens you would like to stake.
- When funds appear on your CEX.IO balance, you will automatically start participating in staking.
The CEX.IO Staking service allows you to trade and withdraw your stake-able crypto whenever you want. While staking on the website and in the app, you can also add funds to your CEX.IO balance anytime to increase potential staking rewards.
What is Cold Staking and How Does CEX.IO Store Staked Funds?
To ensure the safety of users’ funds, CEX.IO uses a hybrid system of cold and hot wallets. Most deposited coins are stored at the exchange’s cold wallets, while a hot wallet supports day-to-day activity on the exchange. As a result, locking coins in cold wallets for staking purposes doesn’t interrupt common interaction with cryptocurrency. It means that on CEX.IO coins accumulate rewards for users, remaining in secure cold wallets.
How Do I Send Crypto to My Staking Wallet on CEX.IO?
If you want to send crypto to your CEX.IO wallet to start staking, go to the Finance page on the CEX.IO website and click “Deposit” next to the token you want to stake. There is a wallet address on CEX.IO where you can deposit funds. Alternatively, you can replenish your balance using the staking dashboard on the CEX.IO website, clicking “Add funds” next to the token you would like to stake. If you use the CEX.IO mobile app, then follow this guide about crypto deposits.
Where Can I Find the List of Available Coins for Staking?
What Coins are Suitable for Staking?
For example, the Bitcoin (BTC) blockchain uses proof of work. Hence, it can’t be used for staking but Cardano (ADA) network uses the proof of stake principle, meaning staking participation.
The criterion of whether or not a coin is suitable for staking doesn’t depend on the platform. It depends on the blockchain network.
How Do I Convert Funds into Stake-able Crypto?
- Instant Buy — buy crypto instantly using your payment card or CEX.IO
- Trade — exchange crypto using numerous crypto-to-crypto and crypto-to-fiat currency pairs
- Exchange option in the CEX.IO mobile app — switch between cryptocurrencies and fiat currencies even when there is no direct market available for trading.
May I Use the CEX.IO Mobile App for Staking?
If you stake coins for more than one staking period, you can find information about distributed staking rewards, taping “Wallet” and then selecting cryptocurrency that you stake. More information about staked coins can be found on the staking dashboard on the CEX.IO website.