What is staking at Bitvavo?
You can get an extra return at Bitvavo by staking your crypto. You will then receive a type of ‘interest’ on your outstanding crypto. In this article, you can read what staking is and how you can profit from it yourself.
What is staking?
At Bitvavo, both off-chain and on-chain staking services are used. In off-chain staking, Bitvavo uses the crypto for its services and in on-chain staking you help approve transactions.
Fortunately, you don’t need any technical knowledge to engage in staking at Bitvavo: once you’ve enabled staking, you don’t have to do anything.
Staking is especially suitable for the long-term investor. To profit from staking, you need to hold your cryptos for a longer time. As a daytrader, you will therefore not profit much from staking.
How can you stake at Bitvavo?
Before you can stake your coins, you need to enable this option within your account. To accomplish this, navigate to settings and enable staking. After enabling staking, all eligible coins will automatically be staked.
Within Bitvavo, you have a separate section which is completely dedicated to staking. In the staking overview, you can immediately see how many coins are eligible for staking and what the estimated annual returns are.
The overview also shows the approximate percentage of staking you will receive at Bitvavo across the different coins. You will not receive compensation on all coins: only cryptos that use proof of stake can be staked.
Staking rewards are paid out every Monday. You will always receive staking rewards in the form of more crypto.
What are the benefits of staking?
The biggest advantage of staking is that you get extra returns, without having to put in any effort or more money. By staking, you can build up a small income from your cryptos and benefit from compound interest: after all, you also receive interest on your new cryptos.
Moreover, by staking, you help to maintain your favourite blockchain. Proof of stake is more environmentally friendly than proof of work, which requires many complicated computers.
What are the disadvantages of staking?
When you are staking, you should hold the cryptos within Bitvavo’s wallet. Especially with large amounts of cryptos, it might be wise to move them to an external wallet. An online wallet can after all be hacked. If you do want to stake, it is therefore smart to read this article about securing your account.
Also, don’t make the mistake of comparing Bitvavo to your bank. Bitvavo is not covered by the deposit guarantee scheme and if something goes wrong, you really will lose the money in your account! Keep in mind that the prices of cryptocurrencies are volatile. You can lose a lot of money in no time.
Staking is a nice extra at Bitvavo, but the interest rates are lower than at other parties. So don’t expect any crazy returns when staking at Bitvavo.
Which cryptos can you stake at Bitvavo?
Below, you can see an overview of the cryptos you can stake at Bitvavo (as of October 26, 2021). Please note that these percentages can fluctuate constantly depending on price developments.
- ICON (7.5%)
- Dai (6.1%)
- Tether (6.1%)
- USD Coin (6.1%)
- Waves (5.5%)
- Cardano (5%)
- Ark (1.07%)
- Litecoin (1.04%)
- Tron (1.03%)
- Bitcoin Cash (1.02%)
- Ethereum (1.01%)
- Bitcoin (0.77%)
- Tezos (0.66%)
- NEO (0.52%)
- Ontology (0.51%)
- Chainlink (0.49%)
- VeChain Thor (0.49%)
Don’t focus on staking rewards
Personally, I am 100% in favour of staking: I have therefore enabled the option within my account. However, don’t forget that cryptos are extremely volatile and that it is therefore more important to pay attention to the potential of the underlying crypto. You have little use for 8% annual staking returns when the crypto is falling by 50% or more.