Does anyone stake their crypto?

[tcpnomad]

Seems like it's safe and can earn you an APY on the coins sitting in your wallet. There is some illiquidity that varies with the currency being staked, but seems manageable (2-3 days for Solana).

 

[koffea]

I stake every coin I own that allows it.
I dont need crypto daily, dont mind waiting a holding period if it has one, for me there really is not downside.
and at least I am making a little bit of interest

 

[tcpnomad]

I stake every coin I own that allows it.
I dont need crypto daily, dont mind waiting a holding period if it has one, for me there really is not downside.
and at least I am making a little bit of interest

What is the risk here? I looked it up, and don't quite fully understand how networks use staked coins and what kind of risk is involved.

 

[koffea]

What is the risk here? I looked it up, and don't quite fully understand how networks use staked coins and what kind of risk is involved.

The biggest risk is that the market can crash while you have it locked for staking. you wont be able to sell readily, and when a coin crashes, the amt you make staking wont be enough to cover it.

other concerns that I am aware of are not staking specific, for example using a 3rd party node always has a low level of risk. Using custodial accounts rather than transferring to your own wallet also has risks. so those risks are not specific to staking, but can effect people that stake

 

[Habibibi]

too complicated for me, and I don't know the tax implications. I just want to buy drugs, so for me, it's: fund stablecoin from bank, send to custodial wallet, send to vendor.

 

[koffea]

sorry didnt read your question fully

1) staking, theoretically adds stability to the network by contributing to price stability, it helps prevent massive crashes. so it encourages long term incentives
2) Aligns incentives through validators, because they also have skin in the game to make sure everything runs good while they have staked money.
3) it helps to prevent a 51% attack by introducing a poison pill. In a staked coin, the attacker needs 51% of the networks wealth. This inherently makes the attack cost prohibitive because as you buy, the price skyrockets, but if you hit 51% honest nodes will implement a slashing protocols to confiscate the coins. where as in non staked coins, the 51% attack is merely a function of compute power.

theres probably other reasons, but those are three big ones.


There is a fourth reason, and I think this often goes understated. But in privacy coins, being able to stake while maintaining total anonymity is massively beneficial. It allows black marketeers to stake portions of their wallet, while laundering other portions. So they no longer lose money due to inflation.

 

[maokai]

What is the risk here? I looked it up, and don't quite fully understand how networks use staked coins and what kind of risk is involved.

To answer your question as how they use them, is it depends. Some use it as a way to remove tokens from circulation which in theory means line go up. They then can take network fees or other revenue streams to reward stakers. One risk here is if you're rewarding stakers with the same token they're staking, with it now comes with sell pressure which then becomes a situation where sure you're getting 5-10%APY relative to the quantity of the tokens you staked but price is now down 30-40% from the time of staking.

 

[koffea]

too complicated for me, and I don't know the tax implications. I just want to buy drugs, so for me, it's: fund stablecoin from bank, send to custodial wallet, send to vendor.

yeah its too bad Monero doesnt allow staking
I think that will eventually be its downfall
but for now, its basically the only thing accepted at the major hubs