The Crypto industry offers many rewarding investment opportunities such as crypto staking and lending. These may appear similar to you but are not. In this blog, we will find out the main differences between crypto staking and lending, how they work, their risks, which one is safer, etc.
So, let’s get started!
What is crypto staking?
Crypto staking is the process of locking up your crypto assets for a specific period to help a blockchain network validate transactions. In exchange, you are typically rewarded in the form of tokens. There are new cryptocurrencies being released all the time. A great way to announce new crypto or keep up with the latest is with Crypto press release distribution.
What is crypto lending?
Crypto lending is leasing your crypto assets to human borrowers in exchange for an interest payment. Crypto lending requires a borrower to offer collateral as security.
How does crypto staking work?
Crypto staking uses the Proof-of-Stake (PoS) model to add transactions to the blockchain.
In crypto staking, you will pledge your coins to a cryptocurrency protocol (crypto staking platform). The protocol will select a validator for confirming transaction blocks. When a validator is selected, it adds a block to the blockchain. Resultantly, a new cryptocurrency is minted, which is then distributed as staking rewards.
The more coins you will stake, the more likely you will be selected as a validator. In crypto staking, the coins remain in your possession when you stake them. You just put them to work.
How does crypto lending work?
Crypto lending works through a crypto lending platform. You deposit your cryptos on the platform. Then, the platform lends those cryptos to a borrower after accepting collateral more than the loan value. You earn interest payments on a weekly or monthly basis. You get your cryptos back at the end of the lending period, plus the interest rate. Lending crypto is also a beneficial option from the borrower’s side in terms of flexibility and speed. When considering crypto lending as a source of passive income it is quite significant to compare it to traditional lending, as it doesn’t require a great deal of personal information, credit history, or constant income. It also offers a convenient interest rate and doesn’t require a long period of confirmation, which we can’t wait for in the case of bank loans.
The borrower can only get back his collateral after paying the entire loan amount and the interest payment. Otherwise, the platform will sell it to help you (investor) cover your losses.
Which cryptos can be used for crypto staking?
Not all cryptocurrencies can be used for crypto staking. Only those cryptocurrencies and stablecoins which work according to PoS consensus can be used.
Bitcoin cannot be used for staking purpose.
Which cryptocurrencies can be used for crypto lending?
Almost every cryptocurrency can be used for lending purpose. In addition, several lending platforms allow lending a variety of cryptocurrencies and stablecoins.
Bitcoin can be used for lending.
How much can you earn by crypto staking?
You can earn interest as high as 11% by staking your assets. The interest is paid in the coin you staked, but some platforms offer interest in different currencies.
How much can you earn by crypto lending?
By lending, your assets can earn up to 17% interest. The interest is paid in the same currency you lent.
What is crypto staking duration?
Crypto staking usually happens in 30-days intervals. In crypto staking, you must stake coins for a specific period. You cannot unstake your coins until then.
What is the crypto lending duration?
In crypto lending, loans duration can be from 7 days to 180 days. But you can take your cryptos back whenever you want.
What are the risks associated with crypto staking?
- Crypto staking has a fixed lock-up period. Therefore, if the price of crypto falls during staking, you cannot unstake it, and it will affect your holding.
- The return rate on staking is not always guaranteed. It can change over time.
- Some platforms require you to lock minimum coins to receive rewards.
What are the risks associated with crypto lending?
- Some crypto lending platforms do not offer recovery in case of loan default.
- Many crypto lending platforms are facing regulatory pressure as they are unlicensed. As a result, if you invest in those platforms, you will likely lose your investment sooner or later.
Top platforms for crypto staking
The following are some of the top crypto staking platforms.
- Kraken
- Gemini
- Crypto.com
- eToro
Top platforms for crypto lending
The following are some of the top crypto lending platforms.
- BlockFi
- Nexo
- Binance
- CoinLoan
Which one is better: Crypto staking or Crypto lending?
Crypto lending and staking are both rewarding in one way or the other way, and they also associate risks. Your experience in both cases depends on the platform you choose.
Crypto lending offers a higher return with more control over your assets, but crypto staking is comparatively safer.
Therefore, you can choose that best matches your requirements.