Because of the scalability limitations of Proof-of-Work (PoW) cryptocurrencies, the Proof-of-Stake (PoS) consensus mechanism is prevalent and taking over as newer cryptocurrency projects adopt the PoS consensus.
With proof of stake, a user has the option to act as a validator by staking crypto and thereby standing a chance of adding the next block to the blockchain.
Acting as a validator means you can delegate your coins to the staking pool for a period which makes you eligible to participate in transaction validation into the blockchain thereby keeping the ecosystem secure.
Staking has a set of procedures to follow which I will illustrate using Cardano on the Binance Exchange.
• One of the advantages of the PoS cryptocurrency is that it does not require a large up-front investment to be a contributor and earn rewards in the consensus process (For example you can begin with 1 ADA).
• If you choose to opt out of a locked staking position before the end of the staking period, you will not earn any interest.
• Whether you stake using an exchange or through your wallet, you will earn coins that you can’t get ordinarily if your coins were just dormant in your wallet or exchange account.
• Cardano as a Proof of Stake cryptocurrency allows you to stake on Binance to earn rewards known as ADA.
SEE ALSO: How to Stake Cardano on Trezor Model T
Here’s a step-by-step guide on how to stake Cardano on Binance:
The first and foremost step is creating an account on Binance.
After registering for an account, there is a mandatory identification process that Binance has introduced for all its users to undergo which is called Know Your Customer (KYC). For you to successfully make use of this exchange platform (Binance), you must pass the identity verification (KYC).
Once you have created a Binance account, you will need to fund it with ADA.
If you have completed the above process and now have ADA in your Binance account, you can start staking.
The good news is that you don’t have you buy ADA in large quantities to get started, because 1 ADA is the minimum amount required to start ADA staking on Binance.
Move a step further by checking the top of the user interface, selecting “Finance,” and then clicking on “Binance Earn” as shown below.
You can now search for the cryptocurrency that you want to stake (which in this case is ADA) since you are in the Binance Earn section.
From the image above, it is obvious that there are currently, two different staking options available.
The first one is valid for 60 days and the other is valid for 30 days.
The 60-day option means a long-term lock on the ADA, so you get a better return (the 30-day option has an APY of 5.09%, compared to 7.79%).
However, you should keep in mind that the APY you can earn when you stake on Binance changes over time depending on the time and market conditions.
This means that when you want to stake at any point in time, you may receive an APY different from what is shown above.
SEE ALSO: How to Use Binance Smart Chain Faucets
Choose A Staking Plan
You can choose between the 30 & 60-day plans. Let’s assume to select the 60-day plan. Then you can enter the amount of ADA you are willing to use. The platform provides a quote which is just an estimate.
Once you have entered the number of coins you wish to stake and the period set, you can finalize by simply clicking “Confirm Purchase“.
Check Your Staking Status
To check the locked staking positions, go to the “Earn” subsection of your wallet and click on the “Locked Staking” in the wallet section of your Binance account.
Don’t think your money must remain locked up until the set time. NO!
If you wish to remove your funds before the end of the staking period, you can.
But on one condition-you won’t get any rewards.
To withdraw it, simply select the “Redeem Early” option. The process usually takes between 1 & 3 days.
If you own a Proof of Stake cryptocurrency, it’s a good idea to check out the various options on how to stake coins.
Whether you use your wallet or an exchange, you can earn coins that you wouldn’t get if the coins were simply idle in your wallet or account.
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