For a lot of crypto users, knowing that staking is a way of earning rewards while holding onto certain cryptocurrencies is the key takeaway. But even if you’re just looking to earn some staking rewards, it’s useful to understand at least a little bit about how and why it works the way it does.
How does staking work?
If a cryptocurrency you own allows staking — current options include Ethereum, Tezos, Cosmos, Solana, Cardano and others — you can “stake” some of your holdings and earn a reward over time.
The reason your crypto earns rewards while staked is because the blockchain puts it to work. Cryptocurrencies that allow staking use a “consensus mechanism” called Proof of Stake, which is the way they ensure that all transactions are verified and secured without a bank or payment processor in the middle. Your crypto, if you choose to stake it, becomes part of that process.
Why do only some cryptocurrencies have staking?
This is where it starts to get more technical. Bitcoin, for instance, doesn’t allow staking. To understand why, you need a little bit of background.
- Cryptocurrencies are typically decentralized, meaning there is no central authority running the show. So how do all the computers in a decentralized network arrive at the correct answer without having it fed to them by a central authority like a bank or a credit-card company? They use a “consensus mechanism.”
- Many cryptocurrencies — including Bitcoin and Ethereum 1.0 — use a consensus mechanism called Proof of Work. Via Proof of Work, the network throws a huge amount of processing power at solving problems like validating transactions between strangers on opposite sides of the planet and making sure nobody is trying to spend the same money twice. Part of the process involves “miners” all over the world competing to be the first to solve a cryptographic puzzle. The winner earns the right to add the latest “block” of verified transactions onto the blockchain — and receives some crypto in return.
For a relatively simple blockchain like Bitcoin’s (which functions a lot like a bank’s ledger, tracking incoming and outgoing transactions) Proof of Work is a scalable solution. But for something more complex like Ethereum — which has a huge variety of applications including the whole world of DeFi running on top of the blockchain — Proof of Work can cause bottlenecks when there’s too much activity. As a result transaction times can be longer and fees can be higher.
Can you staking USDT?
You don’t participate in USDT stake because it is a proof of work consensus, not a proof of stake. That being said, it is possible to earn a passive income “staking Tether”, which is better described as lending it out. This is a way to earn interest, as there is quite a lot of liquidity demand.
Unlike stake other coins, if you cannot earn interest by becoming a “node,” some people use the term lending out coins interchangeably with staking. Because of this, you may see this term from time to time. However, it does not act the same way with another coin, such as Ethereum.
Where to staking usdt?
It’s important to do your research before choosing where to stake USDT. Look into APY rates, fees, and other terms before committing your tokens. USDT staking reward (APY) typically brings around 2-3%, but it can vary depending on the platform, lending terms, and market conditions.
Speaking of the best place to stake USDT, there are several reputable crypto services that offer Tether staking options. The platforms where you can stake USDT include Stakingcoins , Binance, and Aave.
In particular, Stakingcoins currently has very high interest rates of up to 280% for the highest investment package.
The important thing is the interest reward you will receive per hour.
