How Crypto Staking works and why it’s important

You may have heard that crypto investors have begun staking their cryptocurrency to earn a higher ROI over the past few years. According to numerous crypto investors, staking cryptocurrency is an excellent way to generate passive crypto income. It is relatively simple to stake cryptocurrency and earn rewards through a crypto trading platform like Carret.

But you may wonder: What exactly is staking? How does it work? How do they benefit you?

Let’s take a thorough dive.

What is Crypto Staking?

Crypto staking is an excellent method of generating passive income, rewards, and high-interest rates (up to 17% APY with Carret). As part of staking, a cryptocurrency holder commits or locks up their holdings in a cryptocurrency exchange such as Carret.

The procedures for validating cryptocurrency are known as “proof-of-stake” or “proof-of-work” depending on the sort of the cryptocurrency you’re dealing with and the technologies that support it. Each of these techniques assists blockchain networks in achieving consensus, or the confirmation that all transaction data is identical.

Cryptocurrency staking is akin to depositing funds in a high-interest savings account. When you put money into a bank’s savings account, the bank usually uses that money to make loans to other customers. Your reward for depositing funds in a bank is a small percentage of the interest accrued on those funds.

Similarly, when you stake your digital assets, you lock up the coins to contribute to the blockchain’s operation and security. In exchange, you will receive rewards based on yield percentages. Typically, these returns are substantially greater than any interest rate offered by banks.

How does Crypto staking work?

With proof-of-stake-based cryptocurrencies, new transactions are added to the blockchain via staking.

First, participants pledge their coins to the protocol of the cryptocurrency. The protocol selects validators from among these participants to confirm blocks of transactions. The more coins you pledge, the greater your likelihood of being selected as a validator.

The investor’s holdings are then used to validate the information that is “written” into the new block. Since blockchain data is already “baked in” to coins, they can be used as validators. The network then rewards the crypto-staking investors for permitting their holdings to be used as validators.

Your staked cryptocurrency earns rewards because the blockchain puts it to work. Proof of Stake is a “consensus mechanism” used by staking-enabled cryptocurrencies to ensure that all transactions are verified and secure.

How to stake cryptocurrencies?

Cryptocurrency investors can stake cryptocurrencies in several ways. Here, we will discuss the three most prevalent methods:

Through an exchange like Carret:

A crypto high-yield account like 24Carret can help you stake crypto because it pays users interest on their earnings on a regular basis. The fact that 24Carret offers one of the highest interest rates, up to 17% APY, makes it stand out from other cryptocurrency investment platforms.

To stake cryptocurrency with 24Carret, you must create an account on the website or mobile app. Sign up for an account on a Carret platform by giving your name, email address, and password. After you have finished your KYC, you can start staking major cryptocurrencies.

Staking pool:

The goal of a staking pool is to increase the potential payouts for cryptocurrency holders by pooling their resources. By working together, they can leverage their combined strength and improve their odds of success.

This is a popular choice among those who don’t have enough coins to stake alone or who prefer a lower overall risk profile. Individual members of a staking pool are rewarded in proportion to their stakes.

Become a validator:

Validators are nodes that store a cryptocurrency’s entire blockchain, verifying transactions and adding them to the ledger. It works in the same way that a bank does.

Validators store all cryptocurrency transactions in an encrypted digital ledger rather than on their servers.

Validators are paid a fee for each transaction they approve. In exchange for their efforts, they are given newly minted cryptocurrency at regular intervals. Furthermore, if they are using a proof-of-stake system, they earn interest on their crypto holdings.

What is Proof of Stake (PoS)?

Proof of Stake is a newer consensus mechanism that aims to increase speed and efficiency while lowering fees. One of the main ways Proof of Stake cuts costs is by not making all those miners solve maths problems, which takes a lot of energy. Instead, transactions are verified by people who “stake” their money on the blockchain.

Depending on the protocol, the way PoS systems work can be different, but in general, the algorithm picks blocks at random and sends them to a validator node to be checked. The validator then makes sure that the transactions are real. If everything checks out, the validator adds the block to the ledger and gets the transaction fees and block rewards. But if a validator adds a block with wrong information, the staked holdings of that validator will be reduced.

What are the benefits of staking cryptocurrency?

There are several advantages to staking cryptocurrency:

Make a passive income:

It not only provides a way to generate passive income, but it also helps to secure the network. You make it more difficult for an individual or group to take over the network by lending your coins to the validation process.


Because crypto staking employs a PoS consensus mechanism, it consumes far less energy than PoW models that include activities such as mining.

Growth in holdings:

Crypto staking is a relatively simple way to build an investment portfolio, primarily through cryptocurrency exchanges. Users can watch their holdings grow as they earn interest once they deposit.

Lowers network congestion:

When there are no stakers on the network, a backlog of transactions forms, resulting in high transaction fees and long wait times before your transaction is validated. Staking your coins aids in the clearing of these transactions, making the network more efficient.

What are the disadvantages of staking cryptocurrency?

It is best to invest in crypto staking after you have a solid understanding of blockchain technology and cryptocurrencies. To maximize your returns, you should conduct market research before deciding which coins to stake.

Volatility in cryptocurrency prices:

Cryptocurrencies are extremely volatile. Price drops can easily outweigh the benefits you receive. Staking is ideal for those who intend to hold their asset for the long term, regardless of price fluctuations.

A long period of staking:

You must lock up your coins during the staking period, which means you cannot do anything with your staked assets until the timer expires. The unstacking period may take longer than anticipated, preventing you from withdrawing funds or selling assets.

What cryptocurrencies can you stake?

Staking is only possible with cryptocurrencies linked to blockchains that use the proof-of-stake consensus mechanism, as previously stated. Here are some cryptos you can stake:

  • Ethereum (ETH)
  • Bitcoin (BTC)
  • USD Coin (USDC)
  • Solana (SOL)
  • Avalanche (AVAX)

Conclusion: Is cryptocurrency staking profitable?

Crypto investors no longer have to wait for the value of their coins to rise. Investors can now earn crypto from their crypto in the same way that cash holders can with a savings account.

Staking, like many other investments, allows users to profit from their contributions. The opportunity comes with risks, which can be greatly reduced by conducting thorough research before investing in a staking program.

Carret offers over 100 cryptocurrencies for investment. The market fees for the coins and tokens are transparent and competitive. With Carret’s flagship product 24Carret, India’s first high yield account, users can earn up to 17% APY without any lock-in period.

This app is highly recommended for anyone looking for alternative investments in cryptocurrency products. Currently, the platform offers interest rates of up to 8% for Bitcoin, 9% for Ethereum, 8% for AVAX, and 17% for USDC.

Staking, when it comes to profits, is a type of passive income similar to stock dividends. It simply requires you to keep the appropriate assets in the proper location for a set period. As long as a user stakes their coins, compound interest will increase their earning potential over time.