Staking is one of my favorite ways to earn passive income with my crypto holdings on Binance (and also on other exchanges that I use). I’m here to share with you how to stake effectively on Binance to earn interest with your crypto holdings.
It’s actually not that complicated, especially once you get the hang of it. It’s just a matter of clicking some options on your screen. I didn’t do it right away though. I was actually in my second month when I started staking. My first month with Binance was spent reading about crypto, looking for the ones that I might be interested in investing my money into, and learning how to navigate the Binance app.
By the way, before we continue, please be informed that this is not financial advice and should not be taken as such. As I have always mentioned in my previous posts, please always Do Your Own Research (DYOR) before you invest your hard-earned money in any type of investment such as crypto, stocks, real estate, etc.
Also, if you need financial advice, please consult a professional financial advisor to help you out. I’m not a financial advisor. I’m just a part-time blogger sharing my journey in personal finance which includes dabbling in crypto and other side-hustles.
Anyway, let’s get back to the topic, shall we?
What is Staking?
From a small-time investor/crypto holder’s perspective such as myself, staking means locking up your crypto holding for a certain time period to earn rewards. On a technical side, staking also means, holding your cryptocurrency to support the security and operations of a blockchain network.
Staking is only available to crypto that uses the Proof of Stake (PoS) mechanism. You can read more about staking here.
You can stake your crypto on exchanges such as Binance, on multi-crypto wallets, and on mobile or desktop wallets created by the company of the crypto that you’re holding such as Yoroi and Daedalus for $ADA.
It’s like a time deposit where you could put your asset (e.g. money) in it and it will earn interest and it will be locked for a certain period of time.
Since staking rules vary depending on the wallets that you’ll be using, I will only be sharing in this blog the Locked Staking feature of Binance because it’s what I often use.
Before I Stake
Choose the Crypto You Want to Stake
This is the most time-consuming and probably the most difficult thing to do regardless if you stake your crypto or not. Choosing the crypto that has the highest possibility to grow in the future is something that we all struggle with, especially as beginners.
This is the reason why my first month with Binance was spent reading articles and watching Youtube videos about various crypto.
Check Binance Locked Staking Page
Not all crypto have staking options in Binance. So once you have chosen a crypto to hold for some time, check the ‘Locked Staking” page to see if you can stake that crypto or not.
Check if You Meet the Minimum/Maximum Requirements
Each staking option has a minimum and maximum locked amount requirement so be sure to check it out before you stake.
Know the Rules and Schedules
Staking in Binance comes in a variety of locked-in periods. The minimum is usually 30, 60, and 90 days. But recently, they opened a 15-day option with a higher APY. I don’t know how long this will last because I think it’s just a promotional period so be sure to always check Binance before you start staking your crypto.
And also, know that redemption is not instant. It usually takes two days from the date of the redemption before your fund becomes available in your Spot Wallet.
Don’t Stake Money that You Need in the Near Future
This is already quite obvious but I just want to put emphasis on this to make sure that you don’t stake money that you will need to withdraw right away.
During the Staking Period
Here are some reminders to keep in mind during the staking period.
Interest is Credited Daily
Your interest is credited daily to your spot wallet and you can do whatever you want with the interest. Depending on how much your interest is, you can either put it in Binance Savings to earn a small interest or you can re-stake it (for bigger interest).
What I usually do is I re-stake it again to get better interest. I only re-stake those that will meet the minimum locked amount though.
I do this daily. It’s like manually compounding the interest that you’re getting from Binance Locked Staking.
Manage Your Emotion
The crypto that you stake is still subject to the fluctuation of the market. So for example, if you staked 100 $ADA that you bought for $150 ($1.50/$ADA), don’t expect that it will be worth the same once you’ve redeemed it. The price will of course depend on the current market price of $ADA once you’ve redeemed or sell it.
When I was new to staking, I made the mistake of un-staking my crypto because the price was going down only to see the price going back up again once I’ve received my staked crypto back in my spot wallet (it takes around 2 days to receive it back to your spot wallet).
Since I’ve un-staked my crypto before the redemption period, the interest that I have earned was forfeited. So to avoid this, be sure to ONLY stake crypto that you’re willing to hold until the redemption period expires.
After the Staking Period
As I have mentioned earlier, you will receive in your spot wallet your crypto plus the interest earned 2 days after the redemption period. Since I’m planning to hold almost all of my crypto for the mid/long term, what I usually do is I re-stake them back in Binance.
Depending on the crypto that you’re holding, Binance may not always be the best choice in staking your crypto. For example, I do have some $LUNA and Binance doesn’t have an option to stake $LUNA as of the time of writing.
Fortunately, $LUNA has its own wallet in Terra Station. So, I moved my $LUNA out of Binance and staked it in Terra Station instead. By doing this, my $LUNA is now earning around 15% APY instead of not getting any.
To mitigate my risks in crypto investing, I also don’t stake all of my crypto on Binance. I stake a portion of them in other wallets and I keep a small portion of them on my Binance Spot Wallet so I can sell those anytime I want without worrying about the locked-in period and forfeiture of interest (if I redeem early).
How about you? Do you also stake your crypto? Feel free to share your tips and recommendations in the comment section below.