In recent years, the cryptocurrency industry has experienced a boom in the adoption of proof of stake (PoS) blockchain networks. The rise of PoS consensus mechanisms has made “staking” a popular activity in crypto. Participating in PoS networks, aka “staking crypto,” is an easy way to contribute to a blockchain network’s development.
Staking can be a difficult topic to understand. This guide is designed to make staking on CEX.IO as smooth and easy as possible.
What is staking?
Staking is the process of supporting a blockchain network’s operation. Where proof of work networks like Bitcoin require mining to keep the blockchain secure, proof of stake networks like EOS, Tezos, and Cosmos are low maintenance.
Staking is a process that allows users to earn crypto by pledging a portion of their holdings to the network. At a glance, staking appears to work like a savings account, where the bank pays you reward over time for storing funds. But staking works in a completely different way.
While the details vary between different PoS networks, staking usually allows users to contribute to the blockchain network, taking part in transaction validation and governance. The users responsible for confirming blocks of transactions are known as validators. Once a new block is added to the blockchain, new coins are “minted” into existence. The network will reward the validator and users who staked based on a predefined formula.
Note that not all cryptocurrencies support staking, only those where the blockchain uses PoS or similar consensus algorithms (i.e., delegated proof of stake). Bitcoin cannot be staked, for example, because it works using the proof of work (PoW) consensus algorithm. Bitcoin relies on mining instead of staking.
Blockchain networks that support staking include Cardano, Tezos, Polkadot, Solana.
How does CEX.IO Staking work
CEX.IO makes staking assets easier than ever. All you need to do is purchase stake-able assets and leave them in your account.
Once stake-able coins are purchased or deposited into your CEX.IO account, you can start staking. The staking process is automated. As long as you keep stake-able coins or tokens in your account, CEX.IO will stake them for you.
If you don’t have stake-able coins on your CEX.IO balance and want to start staking, then:
- Sign in to your CEX.IO account
- Go to the Earn page in the Products menu and select “Staking”
- Click Add Funds or Buy next to the token you would like to stake.
- When funds appear on your CEX.IO balance, you will automatically start participating in staking.
Please note: CEX.IO has a minimum amount required for staking. In order to stake supported cryptocurrencies, the minimum amount must be held in your account. If your crypto holdings are below the minimum, then you will not be eligible to receive staking rewards. You can find the minimum holding requirements on our Staking page.
Benefits of CEX.IO Staking
To earn staking rewards, you just need to store stake-able cryptocurrency in your CEX.IO balance. But it doesn’t mean that you can’t do anything with your crypto, while you stake it.
Some exchanges and staking providers lock staked coins to allow users to participate in staking. At CEX.IO, your funds are not locked and there is no lock period, meaning you don’t need to wait to return your funds from the staking node. A detailed explanation of our staking approach under the hood can be found in this blog post.
We strive to provide flexibility to our users and offer staking services without restricting users from interacting with their cryptocurrency. Since coins are not locked, it presents multiple opportunities for our users. You can:
- Add funds to your CEX.IO balance anytime to increase potential staking reward.
- Trade your crypto, while staking — we will recalculate the staking reward automatically.
- Withdraw stake-able cryptocurrency without interrupting the staking process.
Moreover, CEX.IO Staking offers users another advantage — automated balance replenishment. Typically, staking rewards are not added to the initial staked balance. With CEX.IO Staking, your balance grows with each distributed staking reward, allowing you to earn more yield with consecutive staking periods.
Staking rewards
CEX.IO distributes staking rewards once a month and re-calculates potential staking rewards every hour. To calculate staking rewards, our system considers the exact time a user owns a cryptocurrency. It allows you to earn staking rewards even if you joined a few days before the end of the staking period. So it’s never too late to join! If you decide to withdraw funds before the end of the staking period, you still will receive a staking reward for the time cryptocurrency stored on your balance.
Each cryptocurrency available for staking on CEX.IO has its own estimated annual yield, reflecting your potential staking reward. It is called “estimated” because the rewards represent an outcome of many factors, including the status of the blockchain network and staking node. That is why the estimated annual yield may differ after the end of the staking period. We try to provide users with the best possible conditions for staking, reassessing estimated annual yield, and special offers.
When you stake crypto on CEX.IO, there are no limits on how many assets you can stake. The ability to stake one, two, or all of the supported cryptocurrencies makes it easy for users to build a staking-oriented portfolio.
Conclusion
Staking is an integral part of the CEX.IO ecosystem, and we continue working on expanding the list of supported cryptocurrencies for our staking services. CEX.IO Staking has become a convenient option for users to earn rewards in crypto. It could be a nice addition for active traders, allowing earning crypto by trading and staking simultaneously. Long-time investors may also benefit from staking, making their crypto work for them. Interested in staking on CEX.IO?
Disclaimer: Information provided by CEX.IO is not intended to be, nor should it be construed as financial, tax or legal advice. The risk of loss in trading or holding digital assets can be substantial. You should carefully consider whether interacting with, holding, or trading digital assets is suitable for you in light of the risk involved and your financial condition. You should take into consideration your level of experience and seek independent advice if necessary regarding your specific circumstances. CEX.IO is not engaged in the offer, sale, or trading of securities. Please refer to the Terms of Use for more details.