📌FAQ
Find answers to the most common questions about how staking works, validator selection, and maximizing your reward
You can also find answers to your questions in our 📚 Glossary
What is Staking in Crypto?
Crypto staking involves participating in a blockchain network by holding and 'staking' tokens in a wallet to support network operations like transaction validation and governance. Stakers typically receive additional tokens as rewards.
Why should I stake?
Staking allows you to have passive income and ensure that your funds are safe with you while accruing additional value as well as working for the betterment of the entire ecosystem.
When you stake crypto, you lock it up so that a node where it is stored can validate transactions on Proof-of-Stake blockchains. In return, you receive rewards in the form of tokens of the same kind that you staked. Essentially, by staking, you increase the number of tokens available to you, which makes staking a comparatively low-risk strategy for getting passive income.
What are the risks of Staking Crypto?
Staking crypto risks include volatility in the coin's value, lock-up periods where you can't access your tokens, and slashing penalties in some networks if rules are violated, leading to the loss of a portion of your staked coins.
How does Everstake Smart Contract works?
Our Smart Contract gathers ETH and assigns funds to the appropriate validator. Once 32 ETH has accumulated, our team will ensure the highest uptime. This includes securing and monitoring the deposited stakes as well as performing necessary updates to the staking software.
How does staking work?
On PoS blockchains, transactions are validated by nodes that have a certain amount of native tokens (a stake). Since the amount is usually made deliberately high to ensure only technically-capable node runners (validators) are present, users can delegate their funds to them in exchange for a share of the rewards that validators get for their work.
The actual funds stay with the delegator, however. Only the right to use said funds for the sake of validation goes to the validator. The user can withdraw their tokens.
What is better - centralized or decentralized staking provider?
A centralized validator, most typically a centralized crypto exchange, actually requires a delegator to transfer funds to them and then stakes them on the delegator’s behalf. Thus, the user runs the risk of not being paid back if some trouble arises. When it comes to decentralized validators, no central entity controls the user’s funds except themselves, so there is no risk of someone running away with your money. This makes decentralized staking more secure and safer than the centralized option.
Is staking crypto safe?
There are certain risks inherent in centralized staking, most importantly, the risk of not controlling your own private keys and, therefore, handing over control of your funds to an exchange. In this sense, decentralized staking is safer since you retain control over your private keys. That being said, decentralized staking is also not completely risk-free as some validators may neglect their duties, which can result in penalties. That is why it is paramount to make sure your staking provider is a responsible one.
How to choose a safe crypto staking provider?
To avoid risking your funds, it is reasonable to keep away from centralized staking providers. Among decentralized staking providers, those who ensure nearly 100% uptime and have geographically-distributed nodes are safer since you won’t risk missing your rewards or having the network shut down by one jurisdiction.
Finally, research the community sentiment to learn which staking providers actual delegators trust.
What is a staking pool?
In many jurisdictions, staking rewards are considered taxable income. The specifics of reporting can vary, so it's important to consult with a tax professional or use a service that specializes in cryptocurrency tax reporting.
Generally, you would report the fair market value of the rewards at the time you received them. Everstake provides users with detailed reports of their staking rewards for easier tax reportin
How to calculate staking rewards?
The calculation of staking rewards can depend on several factors including the network's inflation rate, the amount of the cryptocurrency being staked, and the total amount of that cryptocurrency staked in the network. Everstake provides a staking calculator that users can use to estimate potential rewards based on their staked amount.
Is staking crypto worth it?
Whether staking is worth depends on several factors. These include the anticipated results, the stability and soundness of the chosen network, individual preferences for risk, and an understanding of the staking process and principles. With Everstake, users can maximize their potential results from staking, making it an attractive option for many crypto owners.
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