Sirwin
Sirwin

Staking: Don't Let Exchanges Take Your Profit

By Cryptopeach | Public Thoughts | 21 Dec 2021


Hello,

Proof of stake coins are everywhere today and they are a way to keep your wealth growing. Staking can be a scary business sometimes, so people tend to stake their coins on Exchanges because it's easier and you can't really mess that up.

Staking in exchanges has a serious drawback, the exchange will take some of your profits, take Coinbase for example they can take up to 25% of your profit.

Why this happens?

First the exchange needs to make money, so they will take your coins stake it somewhere where the APY is high and offer you a percentage of that APY.

How can you avoid this?

Avoiding this comes with a little work, you need to know how the ecosystem of the coin you want to stake works. Lets take ADA and ALGO for example, both their native wallets have staking out of the box. This means that you can transfer your coins there and start staking with a fair APY. Since this wallets are part of the ecosystem and are non-custodial they don't take any of your profit away and you will get the full APY to yourself.

Of course you have to deal with holding your seed phrase in a secure place, but this is a very little price to pay for a fair APY. This also helps decentralization.

If you look at DeFi you might encounter some place where they will pay you a much higher amount than on an exchange. Be carefull to not fall for a scam.

If you do this, you will earn more from your coins and exchanges will not mess with your profit anymore. You eliminate the middle man (Exchange) and take every single coin that was earned by you.

Best Regards,

Cryptopeach

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Cryptopeach
Cryptopeach

Crypto enthusiast.


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