Staking is the process of holding or locking cryptocurrencies in your wallet in exchange for rewards and passive income in cryptocurrencies. The more coins are on the account, the more the user will be able to generate. In addition, staking one cryptocurrency can generate income in another cryptocurrency.
Imagine that you put a deposit in a bank and receive passive income for the amount of the deposit. Cryptocurrency staking works in a similar way. This method uses the blockchain algorithm, which is called Proof of Stake (PoS) (proof of share of ownership) and is one of the methods to protect the blockchain from interference and unreliability of the placed data.
There are three types of staking: fixed, perpetual and DeFi staking.
Fixed staking with a predetermined token lock-up period allows you to earn higher returns than perpetual staking.
Perpetual staking allows you to generate coins until you decide to stop the contract and withdraw your assets.
DeFi staking differs from previous ones in that all services are controlled by smart contracts. This type of staking usually has a higher annualized return (APR).