Beginner mistakes when staking crypto👎🏻

You’re more likely to succeed with cryptocurrency staking if you learn from the mistakes of others. Here are some common errors beginners make:

Conducting insufficient research. Some crypto holders are enticed by attractive yields and begin staking their digital assets without learning how staking works or understanding the associated risks.

Ignoring price volatility. New crypto investors might not fully realize that the value of their staked tokens can fall while they’re locked up.

Disregarding lockup periods. A novice crypto staker may not fully consider the lockup period before staking their crypto. Later, they may be unable to access their crypto in the event of an emergency.

Compromising asset security. Token holders who are eager to earn rewards may not consider the entire spectrum of security risks associated with their decisions. For example, they may participate in noncustodial staking without the necessary knowledge, security safeguards, or equipment.

Underestimating slashing risk. Active crypto stakers with their own network nodes may miscalculate the risk of losing cryptocurrency by incurring slashing penalties.

Ignoring tax implications. Staking rewards may be subject to taxation, but tax consequences are frequently overlooked by novice crypto stakers.

Staking too much crypto. Cryptocurrency staking is just one way to potentially grow your investment portfolio; you shouldn’t rely on it for all your investment returns. In other words, staking is a way to diversify your crypto portfolio.

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