What is staking?

Staking is an integral part of the blockchain industry. It’s comparable to making traditional investments: You invest your cryptocurrency and receive returns.

Another way of looking at it is putting money in a savings account. Staking also has fixed and variable rates with restrictions on the period, investment amount, etc. The higher the percentage of returns, the riskier the program becomes.

The market provides many options to stake your coins; however, you must do your due diligence before investing your money.

Why do they pay interest?

Like traditional finance, companies need your money for various reasons. They use it, make more money, and share some of their earnings with investors.

Applying this strategy to crypto:

In simple terms, “staking” in crypto entails earning rewards via the validation process on a proof-of-stake blockchain (which subsequently increases the network’s security).🙂

If you’re confused, don’t worry because the notion of staking has evolved so much over the past few years that it’s on par with bank savings accounts.