January’s 30% market correction brought huge losses to investors of Ethereum and most major altcoins. Therefore, some cryptocurrency investors are considering different options for safer and more efficient returns. The leading altcoin project Ethereum’s staking contracts are a good example. Long-term investors don’t just hold ETH, so they can earn more while they wait.
Why do altcoin traders choose to stake?
With the strong bear pressure felt in the cryptocurrency market, those who want to take a long-term position or accumulate a large amount of coins / tokens are turning to staking contracts. This can change the direction of investments and direct them towards alternative passive income instruments. In short, staking contracts provide “passive income” with coins or tokens left as collateral. However, Ethereum staking may not be a viable option for investors who want to increase their portfolio without spending time investing. Chinese crypto journalist Wu Blockchain shares the latest on Ethereum’s network:
The number of ETH committed in the ETH 2.0 deposit contract exceeded 9 million, the pledge rate exceeded 7.5%, and the market value reached a volume of 30 billion dollars, which can be in the top ten.
How is Ethereum staking done?
To be able to stake on the Ethereum network, users must be validators. The authenticator software is activated with 32 ETH. Validators are responsible for processing transfers and moving blocks across the network. In summary, it is similar to mining cryptocurrencies such as Bitcoin or Dogecoin, where the proof-of-stake based selection mechanism is used with PoS, the proof-of-work place in PoW.
How much does staking altcoins earn?
Ethereum miners can get returns of up to 5.2% per annum by staking their funds. With the standard collateral of 32 ETH, investors can earn 1.6 ETH per year. This investment disadvantage is that funds cannot be withdrawn immediately after confirming the staking contract. The reason for this is to steer away traders and investors who want to take advantage of volatile market conditions.
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