Savings in bank deposits continue to depreciate. Cryptocurrency staking can become an alternative to deposits.
The trend of depreciation of savings stored in banks is typical not only for Russia, but also for Ukraine, Belarus and a number of other countries. In September, the average rate on deposits in Russian banks ranges from 5% to 9.8%, in Ukrainian – from 8% to 12%.
At the same time, the official inflation rate in these regions has already crossed the 14% mark, and by the end of the year it may reach 18%. This means that a bank deposit not only cannot make a profit, but even save money from inflation. As an alternative to deposits, you can consider crypto currency staking.
What is staking and where is the best place to stake cryptocurrency
Staking is a kind of deposit in cryptocurrency on a cryptocurrency exchange or in a special staking pool. In fact, the user contributes part of the assets in a certain cryptocurrency to the general pool for a certain period. The exchange, in turn, uses coins to increase liquidity, and the user receives guaranteed daily or monthly payments.
“Staking is the easiest and most efficient way to make money with cryptocurrency as users don’t have to do anything at all. To date, the Bitget staking pool exceeds $3 million, and the annual percentage yield (APY) can reach 60%, ”explains Gleb Jout, head of Bitget in the CIS.
You can invest in staking pools in any coin, but most exchanges open such pools for staking top cryptocurrencies such as ETH, XRP, BTC and others. In some cases, users can receive rewards in other crypto assets, which allows them to diversify their investment portfolio.
For example, on the platform Bitget has three staking pools open. In one of them, users can invest XRP tokens and receive rewards in the same cryptocurrency. In another case, staking pool participants contribute funds in the platform’s native BGB tokens and receive rewards in XRP. At the same time, the APY indicator is higher than in the first case, and amounts to 64%.
“Another clear advantage of staking is the absence of any restrictions on the size of the contribution. For example, banks are ready to open a deposit account if you deposit 20,000 or 50,000 rubles. In the case of staking, there are no such conditions. You can invest in pools from 1 USDT,” comments Gleb Jout.
There are no maximum staking limits on Bitget. Users can deposit as many coins as they see fit. At the same time, the participant can withdraw his assets at any time and use them for trading.
How to calculate staking profit
Each staking pool offers its own percentage of profitability and its own methodology for calculating profits. However, most existing platforms calculate profit based on the share of the user’s contribution to the pool and the number of participants in it. The Bitget exchange uses exactly this methodology, and the profit can be calculated by the formula: total number of rewards in the pool daily * total number of tokens staked / total number of tokens staked in the pool.
Let’s look at an example. Let’s say there are 100 members registered in a token pool who contributed 100,000 USDT tokens to this pool. At the same time, the total number of rewards amounted to 120,000 USDT. User A contributed 50 USDT to the staking pool, then the APY can be calculated as follows: 120,000 * 50 / 10,000. It turns out that the annual return will be 60%.
“The profitability from staking is several times higher than the profit from deposits, therefore it is gaining immense popularity among users from Ukraine, Russia and the CIS countries in general. Add to this the ease of registration and security, you get a rather attractive offer for investors,” comments Gleb Jout.
Recall that in August, Bitget launched a $200 million insurance fund that will protect user deposits and traders’ funds.
Pros and cons of staking
Like any financial product, staking has its pros and cons, which are useful for the user to be aware of. So let’s take a closer look at this point.
“Among the advantages of staking are simplicity and high profitability. To become a member of a staking pool, a user just needs to register on the exchange, go through the KYC procedure, deposit funds into the pool and not withdraw them until the end of the pool itself,” says Gleb Jout.
At the same time, user funds are not blocked, and a participant can leave the pool at any time, losing some of the rewards.
The disadvantages include the limited number of participants in each pool, as well as the volatility of cryptocurrency prices. Indeed, when calculating rewards, participants mainly focus on the exchange rate of the staking coin in relation to bitcoin or USDT, and during the staking process this indicator may change due to the onset of crypto winter or other market events.
Therefore, when choosing staking for passive income, you need to consider the pros and cons, as well as get to know the product you want to use better. Learn more about staking, farming and trading here.
Source: Bits
I am an experienced journalist, writer, and editor with a passion for finance and business news. I have been working in the journalism field for over 6 years, covering a variety of topics from finance to technology. As an author at World Stock Market, I specialize in finance business-related topics.
