Why steaking cryptocurrencies

Stacking is the process of locking coins that are further involved in the consensus process within a particular PoS blockchain. Through steaking, new blocks are confirmed on the network and transactions are made, while the owners of the cryptocurrency confirm their good intentions for the network and earn money at the same time.


In other words, stacking benefits the network by ensuring that it is up and running and secure. At the same time, the user is financially motivated to use coins that won't lie dead weight on a wallet.


Stacking coins are plentiful today. Here are fifteen options listed on the Everstake platform. Next to each cryptocurrency, by the way, is the annual yield of the steaking. Moreover, this figure is not exorbitant and is around 10 percent.

Staking cryptocurrencies and their annual yields


Where do these percentages come from? It's about issuance - that is, the new coins that are issued with each block. And while in the case of Etherium, Ravencoin and other PoW coins, the reward for block creation goes to the miners, here the reward goes to the validators.


Who gets rewarded when stacking cryptocurrencies

Note that there are most often two roles in PoS networks: validators and delegators. Validators run the node, keep it running, validate transactions in the blockchain and get rewarded for it. Delegators at the same time are coin holders who choose to trust the validators.

To do this, they share their coins – or sometimes votes – with the validator, so that the latter has a better chance of being selected to confirm transactions and thus be rewarded. Eventually the validator is rewarded, after which it shares some of it with the delegate, which is proportional to the latter’s contribution. In addition, he charges a certain commission for his services, i.e. everyone benefits.


For example, in the Avalanche network, a validator can be a network member who has 2000 AVAX, i.e. native coins of this blockchain. At the same time, it is possible to delegate from 25 AVAX.

It should be understood that the validator is also responsible for running and maintaining the node. This costs both time and money. Besides, modern blockchains have serious hardware requirements, i.e. normal people may not have computers with such power.


Why use Ledger for stacking

I’ve been using Ledger hardware wallets for more than two years, and we’ve published a separate article about getting to know the devices. Since then, knowledge of the operation of this category of devices has increased – as well as awareness of the need for their use.


In a nutshell, the hardware wallet stores a Sidphrase - a unique combination of words to control your cryptocurrency - on a special secure chip that is always offline. Because of this, hackers cannot get to it and steal the coins. Moreover, this chip does not disclose private keys to sign transactions, even to the applications needed to conduct transactions with a particular cryptocurrency. So, if you don't share this mnemonic phrase with outsiders, the coins will be safe.

Another important bonus of Ledger wallets is that they have a screen that cannot be hacked. It is connected to the aforementioned security chip and has no access to the internet. Accordingly, hackers cannot tamper with the data displayed on it. This means that even if your PC gets infected with a virus, replaces the recipient's address when sending coins, but still shows the address you specified, the Ledger hardware wallet will still show the correct data. And loss of funds will be avoided.


As a result, hardware wallets are ideal for storing large amounts of cryptocurrency, as stealing it over the internet without the victim’s knowledge and assistance will not be possible. Luckily, Ledger goes beyond conventional coin storage and provides users with new options.

Ledger hardware wallet

Steaming is one such innovation. Currently, six cryptocurrencies can be steamed using Ledger hardware wallets and the Ledger Live branded app. They are Tezos XTZ, Tron TRX, Cosmos ATOM, Algorand ALGO, Polkadot DOT and Solana SOL.

Supported cryptocurrencies for steaking in Ledger Live


Note that even cryptocurrencies that are not on the list above can be steamed using Ledger hardware wallets. The listed coins are available for steaking directly in Ledger Live, which makes the process convenient and intuitive. However, if desired, the devices can be paired with third-party wallets, thus guaranteeing a high level of security for your own cryptocurrency.


By the way, native support for SOL stacking in Ledger Live was added in May 2022. In other words, the list of crypto-assets is gradually increasing.

Which cryptocurrencies I steak

Cryptocurrencies I steak predominantly using the Ledger wallet, but not all of them are supported in Ledger Live. For example, I have AVAX bag, which can be steamed using the network’s official web wallet.

The official Avalanche AVAX wallet

All you need to do in this case is to choose the hardware wallet when you choose the access method.

Accessing the official Avalanche AVAX wallet

As a result, every transaction will be validated through the device, which provides an additional level of security.

AVAX cryptocurrency in stacking

I hold some coins on exchanges as it benefits me. In particular, steaking at least 1800 WOO on the WOO X exchange allows you to trade without any commissions and also gives you one free withdrawal per day.

WOO Cryptocurrency Stacking Levels and Terms

Now it’s time to show you how to stake cryptocurrency through Ledger Live. To do so, let’s delegate SOL.

How to stack Solana SOL in Ledger Live

Now let’s tell you how to use Ledger Live app for cryptocurrency steaking. Naturally, you need to have a Ledger hardware wallet configured, install the appropriate cryptocurrency app and update it if necessary.


Why SOL? Solana is a high-performance Tier 1 blockchain that can handle thousands of transactions per second. The project ecosystem began to develop at a frenetic pace in the spring of 2021, when users were faced with the need for a fast blockchain amidst the congestion of Etherium.

A hundredth of a cent is enough for a transaction in Solana's network - that is, for example, $0.00025. And the developers now also want to develop a mobile direction, so that users can interact with the blockchain using their smartphones. Moreover, they have presented the Solana Mobile Stack platform and even their own smartphone, Solana Saga, which we wrote about here. All in all, I have enough reasons to believe in the project's great future. And the branded cup comes in handy, too.


The official Solana mug

So, let’s move on to the SOL steak. Open the Ledger Live app and find the appropriate account. In this case it’s called Solana Pink – after the colour of my hardware wallet.

Solana SOL account in Ledger Live

We select the “Stacking” button. In response the app will note that the delegated SOLs will remain at our disposal, i.e. we will not have to transfer them to another address. In addition the app will offer to read how the delegation works. We recommend doing this if you do not understand the subject perfectly.

Features of SOL delegation in Ledger Live

Next, choose a validator, i.e. someone who will use your coins to validate transactions. Ledger has its own node, so you can use it. In Solana’s case, the company charges 7 percent of the amount earned – which is normal in the market.

Choosing a validator in Ledger Live


You can also choose a different validator. To do this, click on "Show All" in the screenshot above.


Now select the amount to be sent to the validator. You don’t need to send every penny of it, as you will also have to pay for the transaction fee and the withdrawal of the steak. The app also warns about this.

Choosing the SOL amount to delegate

In the end I left 0.01 SOL for future transactions – that’s enough. By the way, the commission for this type of transaction was the equivalent of 7 cents, it is displayed in the lower left corner. Simple online transfers are much cheaper.

Final SOL amount to delegate to Ledger Live

Next, confirm the details of the transaction. Here you need to make sure that the details displayed match what the Ledger screen shows.

Checking the details of the transaction before delegation

By the way, the device shows all the staking information. It looks like this.

Stacking SOL notification in the Ledger

Then we sign the transaction – and it flies off to the blockchain.

Broadcasting the transaction via Ledger Live

That’s it, next you have to wait.

Confirming a successful SOL delegation

How long to wait? In general, you have to wait for an epoch change to start stacking, which in the Solana network lasts roughly 2-3 days. Accordingly, in most cases the steak should start within this interval.

Naturally, the withdrawal of the steak will not be instant either. It will take a few days to suspend it. However, coins can be withdrawn at any convenient moment.


This is what the details of the delegation transaction look like inside Ledger Live.

Solana SOL delegation transaction details within Ledger Live

The transaction will also show up in the transaction history.

Delegating SOL in the transaction history

That’s the end of it. In few days the shaking will start to run and the coins will start to generate income.

How much will the Solana SOL shaking bring?

What is the income? For calculations, we recommend using Everstake’s calculator. I have delegated 54.34 SOL for $1,803. If the profitability of the network will be stable, in one year this amount will bring me 3.26 SOL or $110 at today’s rate.

Approximate yield of Solana SOL steaking


Again, for me, shaking good coins is preparation for my next bull run, so I'm not interested in yield in dollars per year. The main thing here is to get coins, which will then go for transactions and sales.


Conclusions

Stacking is not a bad thing for a bearish trend, especially if you are consistently gaining a position and don’t plan to get rid of coins. In that case, the amount of cryptocurrency will increase, which will surely prove to be a nice bonus once the industry starts rising.

At the same time, steaking through Ledger Live is convenient and reliable, as you just need to press a few buttons in the app and on the hardware wallet to get started. The main challenge once you start steaking is to guard the mnemonic phrase and not reveal it to anyone. This way, you can keep the coins you buy and earn indefinitely.

Share your opinion about steaking in our millionaires’ cryptochat. We discuss other important developments there as well.