What is staking?
Staking is a way to earn rewards by putting your crypto to work on the blockchain. In return for helping the network run smoothly and securely, you receive more of the cryptocurrency you're staking. The rewards come from the network itself—your crypto isn’t being lent out and will continue to be held under the custody of our trusted partner Bitpanda. It’s a simple and popular way to grow your crypto while holding.
Many blockchain networks rely on a decentralized group of validators who stake their cryptocurrency to ensure the secure and accurate processing of transactions on the blockchain. As a benefit for temporarily staking their assets, these stakeholders can earn additional cryptocurrency through network-generated rewards and fees.
When you stake with Coinmotion, we simplify this process by handling all the technical work for you. Your crypto is staked with other users’ assets through our trusted partner Bitpanda's validator infrastructure. You don't need to worry about choosing validators, meeting minimum requirements, or managing technical complexities. We take care of everything while you receive your share of the network's rewards easily through our platform.
It's important to note that staking is not a form of lending. Your crypto remains in the secure custody of Bitpanda while participating directly in blockchain network operations.
Only Proof-of-Stake (POS) cryptocurrencies can be staked. Coinmotion offers a selection of assets eligible for staking, subject to network availability and support. We continuously work on expanding our selection of stakeable assets.
Why choose to stake with Coinmotion?
In Coinmotion, you can stake with flexibility, ease, and security. Enjoy the freedom to withdraw your assets whenever you want, without waiting periods. Unlike most other providers, Coinmotion offers unmatched flexibility with instant unstaking, ensuring you can access your assets whenever you need them without waiting periods. Coinmotion also automatically re-stakes your rewards so your crypto holdings grow even more through auto-compounding.
The risks of staking
Staking, while a popular strategy for earning passive income, carries a few risks to be aware of:
Price volatility: The value of the staked cryptocurrency can fluctuate significantly. Even while earning staking rewards, you may face capital loss if the asset’s value declines quickly.
Network downtime: Blockchain network outages or technical issues can disrupt staking operations, potentially resulting in missed rewards or, in severe cases, temporary inability to access your staked assets. Extended network problems could impact the value or availability of staked capital.
Slashing penalties: Slashing penalties are imposed on validators and their delegators (you) for network misconduct. This can happen if validators approve fraudulent transactions or fail to perform their tasks properly, resulting in lost rewards or a reduction or even a complete loss of the staked capital. Please note that Coinmotion may not be liable to compensate any losses resulting from slashing penalties. Fortunately, slashing is historically rare across major proof-of-stake networks, typically affecting less than 0.1% of validators. However, the risk may vary between different blockchain networks (especially in smaller ones).
Smart Contract Risks: Staking often involves smart contracts, which are software-based agreements on the blockchain. While generally secure, they can contain vulnerabilities or bugs that could be exploited, leading to potential losses.
Regulatory changes: Regulatory shifts could impact the taxation, legality, and viability of staking in certain regions, potentially affecting your assets and staking operations.
While Coinmotion takes considerable measures to mitigate these risks, it's essential to understand and consider them when deciding to stake your assets. Please see more information in the applicable Expansion Staking Terms.