What is staking and is it worth it?

CWMMC

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?

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.

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?

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

dirk_dangler

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

Cohaw

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

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.