With Trump’s ascension looming in the corner, investors and traders alike are looking for ways to improve their earnings from the market. That’s where the staking mechanism comes into play. It is an amazing way to boost your stash of crypto and also with limited work on your part. As staking only works for the PoS blockchains, there are only a certain number of cryptos that you can stake. Out of these cryptos, one of the most prominent ones is the Litecoin. In this article, we will look into how you can easily stake your LTCs, the things that you need to consider while staking a coin, and the potential risks associated with it.
Litecoin: A Brief Overview
Litecoin LTC is one of the most prominent cryptos in the market. The coin officially debuted on the 13th of October 2011 and was derived from a fork in the BTC by Charlie Lee. The coin was initially put into reality to prevent the mainstream miners from dominating the crypto-mining industry. The functions exhibited by the Litecoin blockchain network are similar to those of BTC’s but the algorithms employed to make them work are entirely different.
However, the objective of the famous blockchain network has shifted since then. Now, the platform is currently trying to integrate itself into the financial sector and become a key player in our day-to-day transactions. The blockchain network employs a script-hashing algorithm and can process up to 50 transactions per second. $LTC, the native token of the Litecoin network is currently trading at $100.53 and is ranked #24 in the crypto market based on its market cap.
What Is Staking & How Does It Work?
Staking is one of the important aspects of the crypto world that offers investors an easy and efficient way to increase their earnings from the market. It is a process by which users validate transactions on a blockchain network and earn rewards for their contributions. This mechanism is only found in the Proof of Stake (PoS) blockchain networks. This means, that not all cryptocurrencies can be staked to earn rewards.
In the staking process, users lock their tokens in a staking pool or wallet on their respective PoS blockchain network. Then, the network protocol chooses validators to confirm the transactions that took place in the blockchain. The more coins you stake, the more likely you will get chosen.
When the transactions get verified and a new block is added to the blockchain, you receive a reward based on the number of tokens you staked. You can also unstake your coins later if you trade them. However, in some cases, there is a minimum time that you need to lock away your tokens. In such cases, you can only unstake the coin after the time frame ends.
How To Stake Your LTC Token?
If you’re interested in staking your LTCs in a blockchain network to add to your passive incoming and are wondering how to do so, you have come to the right place. Here, we will provide a step-by-step guide highlighting what you need to do to stake your LTCs.
- Step 1: Set up a wallet and fund your account with LTC.
- Step 2: Conduct thorough research and choose a staking platform. Famous platforms like Coinbase and Binance provide easy staking.
- Step 3: If you want complete control over your assets, you can also stake them through private wallets like Exodus or Trust Wallet.
- Step 4: In case of exchange staking, connect your wallet with it.
- Step 5: Select how many coins you want to stake and confirm the transaction.
- Step 6: Once you have staked, your crypto will be locked up for a certain time frame, and you will start earning.
Things To Consider While Staking Crypto
Before staking your crypto in a blockchain, there are many things that you need to consider. Here, we will look into the important ones so that you can maximize your earnings and not suffer any unnecessary loss.
- Minimum Staking Amount: Some exchanges or networks have minimum staking amount requirements, which you can bypass through pool staking.
- Locked Tokens: During staking, your asset gets locked away. So, make sure that the lockup period is in line with your needs as you can’t buy or sell these tokens during the staking period.
- Crypto Rewards: While staking your token, research the Annual Percentage Yields (APYs) provided by different platforms so that you can choose the best one.
- Regulations & Tax Concerns: Depending on where you are staying, there might be taxes associated with the staking rewards.
Potential Risks Associated With Staking
Staking your crypto on a network allows you to easily boost your earnings. However, there are also considerable risks associated with it. Here are some of them that have the potential to bring a loss to you.
- Lock-Up Periods: During a lock-up period, you can’t sell or trade your crypto. If the staked coin’s price goes down, you can’t sell them at your stop loss.
- Market Fluctuations: Crypto prices are highly volatile causing your staked capital to lose its value. You might need to consider this while calculating returns.
- Project Failure: The success of your staking is entirely up to how the project is faring. You could lose your assets in case of project failure.
- Security: If the platform you used to stake your token is not secure, you could lose your asset from theft and hacking.
Final Remarks
Staking your LTC token is one of the best ways to increase your stack of LTC tokens without doing much work. It can also benefit you a lot if you choose the best staking plan and platform to get maximum APY. However, there are also several risks associated with staking your LTC tokens as mentioned above. If you ignore them and conduct staking without researching the trends in the market, there is a high chance that you will lose your money. Keep in mind this while staking your tokens. For further information regarding the LTC token and the various updates about the events in the crypto world, stay tuned.
