Many are asking if it is possible to make money with Ethereum through staking. There are ways to make money by investing in ETH, such as trading and staking ethereum, including:
- HODLing
- liquidity mining
- lending
Stake Ethereum
Staking ETH can be done by:
- locking cryptocurrency in a smart contract
- offering your services as a validator
Validators that have 32 ETH will be chosen randomly for transaction verification and add new blocks to the blockchain. As an exchange, they earn minted ETH and portions of the network transaction fees. The native token ether in Ethereum is used on the blockchain as a form of:
- payment
- reward
- collateral
How to stake Ethereum?
Participants have choices to stake Ethereum, such as:
- solo stake
- participate in staking-as-a-service
- join a staking pool
The trust assumptions and trade-offs to stake ETH by an intermediary or independently may change:
- Solo staking. This is the most secure option. A 32 ETH is needed for staking with a constant internet connection and a dedicated computer.
- Staking pools. Use any amount of ETH and join a pool. Using a pool is used to create a 32 ETH node. The rewards will be distributed based on the pool rules, which are based on how much to stake. Some pools will lock your ETH in a smart contract and then offer an ERC20 token to represent it.
- Staking-as-a-service. This is the least secure option. You are trusting others to act honestly, you need to delegate your ether.
The minimum deposit requirements for pooled staking are lower than solo staking and staking-as-a-service.
Benefits of staking in Ethereum
Ethereum staking passively earns income on your ETH holdings. The rewards will be distributed periodically and with the potential to appreciate if the ether’s market increases. The reward amount will depend on various factors, such as:
- Amount of ETH you stake
- Length of time you stake it
- Overall activity on the network
Ethereum staking will strengthen the protection of the network by incentivizing validators. Anyone can join in staking with a small amount of Ethereum.
The right staking method
choosing where and how to take ETH, you should consider different factors:
Deposit requirements
The minimum deposit requirements can influence the flexibility of staking strategies. The higher minimum deposits require longer staking periods to equalize and remove capital from the investment portfolio. The lower minimum deposits encourage shorter staking periods and release capital allocations for other investment areas.
Cybersecurity
Staking involves locking an amount of cryptocurrency for an extended time. Choosing a platform that mitigates the risk of theft and loss is an advantage.
Staking fees
Staking fees may change between options of wallets and exchanges, which impacts the overall returns. It is essential to calculate commission fees for stake participation. Look for the best ethereum staking platforms that offer competitive fees.
Customer service
When running into any issues and having some questions about staking, a responsive customer representative is essential.
Coding ability
Basic coding knowledge is needed when setting up and interacting with the validator node. Some aspects of the setup are done through graphical user interfaces.
Now, by understanding and learning all these, you are ready to stake ETH.
