If you’re looking for ways to earn interest or get tokens on your crypto coins, there are multiple ways to do that. Two common methods you can try out are staking and airdrops.
But what is staking? How about airdrops? What are they? How do they even work?
Let’s look at both, explore how they work and the benefits of each strategy. Additionally, we’ll look at the risks involved and get you up to speed on how to use both of them.
Staking Vs Airdrop Compared:
First, let’s work out what these two terms mean and the difference between them.
Staking Crypto: What It Is
When you stake your cryptocurrency, you commit it to support your blockchain network and help confirm transactions. Staking is quite common among assets that use the proof-of-stake (POS) model to build their blockchain.
Proof-of-stake is an excellent way to make a passive income from what you accrue as interest. Read Is Staking Crypto The Same As Interest.
With hundreds of projects now using the POS model, it’s now much easier for you to earn interest or other rewards on your coins by staking them.
Although not exhaustive, here’s a list of some popular coins you can stake and potential returns you can make:
- Ethereum – Staking earns interest of anywhere between 5% and 17% per year
- EOS-Staking has an average return rate of 3.2%
- Tezos (XYZ)–Staking has an annual interest rate of about 6%
- Cosmos (ATOM)–Annual return rate is about 7%
- Cardano (ADA)–24% annual return rate
How Does Staking Work?
If you stake your coins by pledging them to the crypto protocol, the protocol chooses you as a validator. Validators help the blockchain confirm transactions and mine new blocks. The more you stake, the more likely you are to validate more transactions and create new blocks.
Once a new block is added to the blockchain, the protocol generates new coins and rewards all validators who took part in mining it. That’s also how you earn rewards.
Although it’s more common to receive rewards in the same crypto you staked, some blockchains may reward you with a different type of cryptocurrency.
Staking only works under one unique condition:
You must own cryptocurrency that uses a POS model. Because staking is how new transactions are added to the blockchain, the crypto ecosystem needs participants to stake their coins.
Cryptos that use a proof-of-work model use computational power, and cannot support staking.
Always remember that any coins you stake remain yours whenever you stake them. Once you put them to work by staking them, you can unstake or withdraw them later.
Unstaking, unfortunately, isn’t usually immediate. You may have to wait for a set period before accessing your coins again.
Many cryptocurrencies require you to stake your coins for a minimum period before unstaking them. Before making this decision, make sure you know how your coin protocol works.
Also read Can You Stop Staking Crypto?
An airdrop is a marketing strategy that sends a small amount of a new virtual currency to the wallets of active blockchain members to creating awareness about the new project.
How Airdrops Work
Airdrops are how blockchain startups kickstart new virtual currency projects. They help raise awareness of the project and get people started on trading these coins.
Most projects will use airdrops once they’re listed on an exchange in an initial coin offering (ICO).
Most new cryptos will use airdrop promotions on their company websites and on popular cryptocurrency forums.
Anyone with a crypto wallet can take part in an airdrop. But to qualify for an airdrop, some projects may require you to hold a certain amount of crypto coins in your wallet.
In other cases, all they may require is a small service for the airdrop. The project owners may ask for something as small as a tweet, a post on your Facebook or forum, or a blog post.
Let’s explore some common types of airdrops:
A Bounty airdrop sends tokens to recipients who promote a blockchain project on social media platforms upon request.
Usually, you’ll access these tokens after a small service, like sharing a post that promotes the project on your Facebook, Instagram, YouTube or Twitter.
These tokens are reserved for loyal followers of a particular virtual currency project or blockchain community. This type of airdrop is often run by websites and aggregators who give tokens to consistent followers.
If you hold a certain number of coins in different cryptos, you may receive rewards and tokens for holding them.
A standard airdrop works by sending a few coins to new wallet holders for a service. Everyone with a wallet qualifies for a standard airdrop.
All you have to do is create an account at a virtual currency project or sign up for their newsletters.
What are the Pros and Cons of Staking?
Staking has its benefits and risks. Here are some of them:
- You can stake without relying on the internet (also known as cold staking). This way, you continue earning interest by leaving your coins in your wallet.
- You can stake your coins to mine new blocks to the blockchain. All refundable deposits you make to the project help validate mined blocks. They also verify your investment in the profit of the coins mined.
- Staking is a safer investment, especially against attacks from countries that restrict cryptocurrency mining and trading.
- It’s straightforward. Staking doesn’t require much knowledge. To stake, just purchase coins and deposit them in your wallet. Buying elevates the price of the coin in your digital wallets.
- Profits for staking are guaranteed. With time, coin market valuations usually go up, which boosts the value of all the coins you stake.
- Staking is energy efficient and environmentally friendly. You don’t require computational power like cryptos that use the proof-of-work model to mine new blocks. A simple laptop or mobile phone is more than enough to stake.
- Staking blocks you from using or trading your funds until the end of the staking period. You won’t access your coins until the staking period elapses.
- You can still receive rewards for just storing crypto in your wallet, although it doesn’t make much profit. Rewards are lower, but so is the risk.
- There’s a risk of a decrease in availability of cryptocurrency, often caused by large players holding coins.
What are the Pros and Cons of Airdrops?
Airdrops have their own benefits and undoings, too. Here are some of them:
- It’s cheaper and simpler to market your crypto with Airdrop. Companies that promote new virtual cryptocurrencies only give out small amounts to wallet holders who want to promote the currency.
- Small wallet holders can get free cryptocurrency. These freebies can rise in value over time, earning you massive profits at no upfront investment.
- Airdrops are an excellent fundraising method
- During airdrop campaigns, social media floods with information. As more people learn and adopt your currency, this may increase its perceived value.
- It’s difficult to balance sending the right number of tokens to the right number of people. Too few tokens may reduce your marketing and community impact. Too many tokens might saturate the market and reduce coin value.
- Recipients may trade the tokens even before they become valuable. If many wallet holders sell their tokens early, the value of the new coin will drop drastically.
- Airdrops are susceptible to scammers who create fraudulent pump-and-dump schemes to make a quick profit.
Where to Find Airdrops Crypto
Airdrops are easy to find. Here are four places you can go today and find some:
This website is an excellent source that publishes the latest airdrops. Once on it, pick the coin you want and click on it. The site will guide you step-by-step about what to do to receive an airdrop.
This website shows you new airdrops and their enticing features. You’ll also find a step-by-step guide to sign you up to hold the coin of your choice.
On this platform, you’ll watch and take part in real-time coin airdrops. Just like other platforms, this one has a step-by-step process on how you can receive new coins.
Twitter is just as resourceful. Search the #Airdrop hashtag and go to the latest result. You’ll find the latest crypto airdrops available in the market at that time.
What is an NFT Airdrop?
An NFT airdrop is quite similar to a standard airdrop, but involves Non-Fungible Tokens (NFTs). NFTs are tokens that are unique and cannot be replicated or replaced.
If you’re looking to earn interest on your proof-of-stake coins, an excellent way to do so would be to stake them. You can enjoy an attractive interest rate on your coins and make profits by simply letting your coins work for you.
Airdrops are another excellent way to earn tokens, although they may be less valuable long term.
If you’re just getting started in the world of crypto, airdrops are an exciting way to earn free tokens for relatively small services.
It’s also a risk-free way of learning about blockchains and how cryptocurrency works.
Want to make more? Use both methods.