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What is staking and is it worth it?

  • 06-12-2023 10:02am
    #1
    CWMMC
    Registered Users, Registered Users 2 Posts: 166 ✭✭


    Recently I was having a nosey around on Revolut and seen Crypto and staking. In particular I believe with DOT I was looking at, it was saying earn morning based on staking your crypto at a 12% per annum. Can anyone tell me the risks associated with that? I Presume the staking/investing is done at market price so once you lock in it's not guaranteed to be that?



Comments

  • #2
    erlichbachman
    Registered Users, Registered Users 2 Posts: 1,002 ✭✭✭erlichbachman


    Yea, you could buy dot now at 5.88, stake for a year and earn your apr, but next year dot could be 4.00, so you could have earned 12%, but lost almost 30%, but it also could be worth 10.00, so there is a risk factor.



  • #3
    CWMMC
    Registered Users, Registered Users 2 Posts: 166 ✭✭CWMMC


    https://www.boards.ie/discussion/comment/121461166#Comment_121461166

    Okay thanks, and the 12% is that locked in at per say the 5.88 or does it depend on the market? So say its worth 4 is it 12%of 4 or 5.88?



  • #4
    erlichbachman
    Registered Users, Registered Users 2 Posts: 1,002 ✭✭✭erlichbachman


    You are staking the dot. The 12% is on the DOT, if you buy 100 dot and stake for 1 year at 12% then after a year you have 112 dot.

    There are other considerations, I don’t know much about Revolut crypto, but I’d safely assume they will charge a fee for purchasing the crypto. Also some staking has a time period to unlock, that’s the period between saying I want to unstake my dot, and getting it.

    As always with crypto, only invest what you can afford to lose



  • #5
    dirk_dangler
    Registered Users, Registered Users 2 Posts: 546 ✭✭✭dirk_dangler


    DOT has 7.5% token inflation rate yearly, so you are really getting 4.5%



  • #6
    Cohaw
    Registered Users Posts: 34 ✭Cohaw


    Is there anywhere you can open an account and stake Chainlink? Can’t find one



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  • #7
    Potatoeman
    Registered Users, Registered Users 2 Posts: 4,410 ✭✭✭Potatoeman


    Depending on what you are staking and where there is risk. Most staking involves giving the crypto to the staker that is running a node and they give you the staking rewards after taking a cut. The risk is they are hacked or a bad actor and that’s why you will see a warning about impermanent loss.

    You generally want to pick a larger validator that’s trusted but that gives them more network control and the possibility of something like a double spend attack or just over centralisation. Just be careful picking the highest rewards as they should not be offering more than the chains base inflation amount.

    Edit: check the unlock time for unstaking too as if you want to sell at a peak you want know how long the unstaking takes or not stake what you want to sell in the short term.



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