“Don’t work for money, make it work for you.” — Robert Kiyosaki, author of Rich Dad Poor Dad.
Aside from capital gains, one of the things that makes cryptocurrency and modern decentralized finance (DeFi) more appealing is the additional incentives that it provides. Simply put, you can earn passively by HODLing your crypto assets other than anticipating a rise in market value.
The Mean token is one of the projects that offers this type of extra incentive to HODLers.
Staking Your crypto assets is one of the popular methods of profiting from HODLing.
but what does staking even mean?……..for starters, it means making your money work for you, just like Robert Kiyosaki had advised.
Now, let us explore.
Hold on tight, we move at full speed!
What is staking?
Staking is a process that allows token HODLers to earn passive rewards for committing their tokens to a project’s ecosystem. This is possible by locking up tokens over a period of time. Depending on what token is staked and the platform used for staking, the period of staking can be fixed or flexible.
Staking is similar to services available with some traditional investments, but with DeFi, the ROI is higher. This, along with many other opportunities in DeFi, is what makes it superior to traditional finance (TradFi).
How does staking work?
Staking a crypto asset is possible with tokens that support the proof-of-stake (PoS) consensus mechanism.
Consensus mechanism refers to the way that a blockchain network is governed, and transaction validated. Ethereum formerly used the proof-of-work (PoW) consensus mechanism which consumed too much power and was expensive to run, and recently moved to proof-of-stake (PoS). Ethereum HODLers can now stake their ETH to secure the Ethereum ecosystem and earn more ETH.
The PoS consensus mechanism requires locking up tokens to secure a network. Those that lock up their tokens to secure the network are called validators. Validators who lock the most tokens are more likely to be chosen to validate transactions on a PoS network. Rewards for validating are usually paid in form of the network’s native token.
Solana employs a proof-of-stake consensus mechanism, which means the SOL token can be staked to earn additional SOL by securing the Solana ecosystem.
By staking, you’re putting away your token for the duration of the staking and you will not be able to use it until you unstake. An alternative to this is liquid staking.
How to profitably stake and earn
To get the best from staking crypto assets, there are certain things to put into consideration.
1. Identify the token you want to stake: It’s necessary to note that not every token in the crypto market supports staking. Usually, tokens built on the PoS network are more likely to support staking. Make sure you do your research to identify tokens that support staking.
2. Consider the risk-to-reward: Staking, like everything else in investing, comes with its own set of risks. The risk-to-reward analysis considers the possibility of things going wrong as well as what you stand to gain if everything goes as planned. The greater the ROI of a project, the greater the risk associated with it.
How many people are willing to stake a token also says a lot about it; you don’t want to put your money where other people don’t think it’s worth it. At the time of writing, there are over 4 million staked MEAN tokens with a TVL of over $600,000 at a 19% APR.
3. Stake: That’s right! After ticking all the boxes that certifies your ‘staking appetite,’ the next thing to do is hit that stake button.
Popular web3 wallets support direct staking, and you could also stake through trusted and authorized dApps. You can stake on both centralized and decentralized exchanges.
The MeanFi dApp supports a staking feature that allows you to stake the MEAN token and earn some extra MEAN token. You’ll receive staked MEAN (sMEAN) equivalent for your stake. When you unstake, this will be used to redeem your MEAN (including any additional MEAN earnings).
If you’re already thinking about becoming a long-term investor by HODLing, why not simply stake? Staking allows you to profit from holding if you do not intend to take profits anytime soon.
The reason anyone would put money into a project is because they believe in its growth. By taking part in a token stake, you are actively supporting the project in which you have invested.
Staking also allows you to secure a project’s ecosystem while earning money in the process. Validators who have staked their SOL tokens confirm transactions across the Solana ecosystem. As a validator, you actively contribute to the security of a project’s ecosystem. A secure ecosystem means a safer investment.
Staking is a passive way of making money with cryptocurrency. It is also a method of incentivizing long-term cryptocurrency HODLing. However, as with any other investment opportunity, it is not without risk. It is always best to invest only what you are willing to lose.
Interested in staking MEAN token and learning about its earning potential? Go to the MeanFi dApp.
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