Investors around the world made a beeline to participate in the burgeoning cryptocurrency economy. One cryptocurrency that has attracted significant attention in the markets is Stellar (XLM). Starting off at $0.09205, Stellar has gained a significant following owing to the multitude of benefits it entailed for investors.
Staking Stellar is one of the features that has caused waves among crypto traders across the globe. It is basically a form of investment where users lock up their tokens for a fixed period in return for rewards. This not only helps support the growth of the blockchain but also allows users to earn rewards without actually having to trade.
How to Stake
- Get a Stellar Wallet: To stake Stellar, you will need a Stellar wallet that is able to store the cryptocurrency. One of the most popular wallets is the Stellar Desktop Client, which you can download from the official website. This wallet allows you to store, manage and stake your Stellar Coins in an easy and secure manner.
- Choose a Staking Pool: The next step is to choose a staking pool. A staking pool is a network of users who combine their funds to jointly participate in Proof of Stake (PoS) consensus voting on the Stellar blockchain. One of the most popular staking pools is LOBSTR, which allows you to set up a Stellar wallet and start staking in minutes.
- Configure Your Staking Pool Settings: Once you’ve chosen a staking pool, you need to configure the settings in order to get started. This includes setting the number of coins you want to stake, the frequency of rewards, and other variances of the pool. You should also consider setting up 2-factor authentication for additional security.
- Stake coins: Once you’ve set up the pool and configured your settings, you’re ready to start staking your coins. You simply need to enter your Stellar wallet address and the number of coins you want to stake, and you’ll start receiving rewards after a few days.
- Track your rewards: Once you’ve started staking your coins, you’ll need to track your rewards to ensure that you’re getting what you’re entitled to. To do this, you can use a third-party tool like stakingrewards.com, which allows you to track rewards from various staking pools.
- Withdraw rewards: Once you’ve received your rewards, you can then withdraw them to your Stellar wallet. To do this, simply enter the amount you want to withdraw and then follow the instructions as directed by the staking pool. Once the transaction is confirmed, you’ll see the rewards reflected in your wallet.
At present, however, one has to stake their XLM for a considerable period in order to gain any significant gains. A minimum staking period of 30 days is required to start earning rewards on Stellar, although users can opt for a maximum period of up to 365 days. It is also worth noting that staking will require users to lock up their XLM coins which would mean they cannot enjoy any arbitrage opportunities during the staking period.
The staking rewards are usually determined by the number of coins users have staked and the inflation rate of the blockchain platform. Each time a new block is created, the inflation rate distributes rewards to stakers proportionally. It is also worth noting that such rewards may vary from time to time, depending on the performance of the network.
Apart from staking rewards, investors may also enjoy additional benefits associated with staking XLM such as Cross-chain Trades and Atomic Swaps. Cross-chain trades allow users to trade their Stellar tokens with those from other chains. Atomic Swaps, on the other hand, enable users to instantly exchange their tokens for those of another blockchain. This allows for increased inter-chain liquidity and improved trading experience.
Seen from this light, it is evident that staking Stellar (XLM) can be hugely beneficial for investors. Not only does it provide additional rewards and features, but it also comes with virtually no risks. Moreover, staking also helps to protect the network from malicious actors and ensures that the blockchain remains secure and operational.
Conclusion
In conclusion, staking Stellar makes a lot of sense for investors who are planning to hold their coins long-term. Not only do they earn rewards but are also eligible to access exclusive features such as Cross-chain Trades and Atomic Swaps. With such incentives, it is no surprise that staking Stellar has gained considerable traction in the cryptocurrency markets.
FAQs
Stellar is an open-sourced blockchain platform that is designed to enable swift, borderless and low-cost financial services. By staking Stellar, you can earn interest on your cryptocurrency investment while being part of a secure and stable network.
The cryptocurrency market is highly volatile and price fluctuations can cause drastic changes in your investment. As the current price of Stellar is $0.09205, there is a potential for both gains and losses. Furthermore, the cryptocurrency market experienced a crash in 2022 which puts further risk to staking Stellar.
While staking Stellar does have its risks, you may still make money even if the market crashes. It is still possible to make a profit from staking Stellar at a lower price albeit with more risk. A financial advisor or economic professional can help provide more insight into the risks involved in staking Stellar.