There are ways to generate profits in the crypto industry that don’t involve actively trading assets, and these wealth-building opportunities have gained traction during the last few years. Crypto staking, and yield-farming are two other ways of earning more crypto by locking your assets.
This article discusses how yield farming and crypto staking differ and which method is best for you.
What is Crypto Staking?
Crypto staking is where a user provides a “stake” of coins or tokens to verify transactions, hoping to receive some of that token for their contribution. Proof of Stake blockchains (PoS), require users to stake a certain amount of tokens in order to verify transactions. Blockchains may have different minimums but most work in a way where the stakers who put up more have a greater chance of being able to verify.
These PoS blockchains have a specific set of rules that network participants must follow to stake crypto and validate transaction. These rules are embedded in the PoS algorithm and vary from case to case – they involve deposit thresholds, potential rewards, penalties, locked time, and other conditions.