The #1 Thing People Get Wrong About Staking Platforms
Staking is a great way to earn yields and interest. You don’t have to do any extra work but only delegate your funds to generate rewards.
Additionally, staking is a more or less straightforward process and needs no technical knowledge. You only have to be aware of how staking works and the coins you want to put up for staking.
Best of all, several staking platforms are available online to help you stake your cryptocurrency. You can join any platform and start earning rewards for your coins.
Sounds simple enough, right?
Most people make a very basic mistake when it comes to staking platforms. They don’t research the portal and jump right in to stake their funds.
However, that single mistake can invite unpleasant surprises and put the coins you stake at risk. Let’s explore why it is so necessary to dig into details while choosing a staking platform.
Why Not Researching a Staking Platform is a Big Mistake
Most of us are used to shopping online today. So, how do you go about when you want to order a product from an online store?
Unless it’s Amazon or eBay, your buying process would probably start with researching the online store. You would most likely take to Google and type in the name of the store for more information.
What are the things that you will look for?
- Signs of reliability and trust
- Shipping and refund policies
- Ways of payment
- Media coverage of the store
- Security of the store
You will choose to buy from the online store only when you have assessed it on the above parameters. Additionally, your trust will increase when you find good reviews or news articles about the store.
The same applies to staking platforms.
The Importance of Researching Staking Platforms
Crypto holders can use different ways to stake their coins. They can choose to stake on any cryptocurrency exchange that offers staking options. Additionally, you can also go for a centralized or decentralized exchange based on your preference.
Along with that, we also have DeFi platforms and staking-as-a-service platforms to earn staking rewards. No matter what you choose, you should research all platforms for signs of trust and reputation, suggests Investopedia.
Scams are pretty common in the world of cryptocurrencies. Founders often abandon their projects and run off with investors’ and users’ funds. Moreover, fishy-looking platforms may be the storefront of a fraud portal that actually steals your crypto coins or private information.
In addition, some platforms may charge commissions from your rewards or offer low interests.
As a result, you shouldn’t create your account on the first staking platform you come across. You should do that only when you are completely sure about what you are choosing.
Apart from that, don’t believe everything you read online as you can be lured into a scam! Let’s explore the top factors to research so that you can select a staking platform with confidence.
How to Research a Staking Platform
The internet is our savior in the digital age. You can find information on almost anything by simply Googling what you are looking for.
Therefore, head over to a search engine and begin your research. You should also go through the website of the platform to gather as much information as you can.
Here are the top factors to research to choose a staking platform:
Terms and Conditions
The first thing to research is the rules guiding the staking process on any platform. You should carefully read the terms and conditions even before you sign up. If something seems confusing, you can contact support and place your queries.
Interestingly, that even works to assess if the platform is legit, apart from getting answers to your questions. If the support doesn’t get back to you, it is time to look for another platform.
Coming back to our topic, the rules should be clear enough and provide all the information you need. Check for things like:
- Annual rewards and APYs
- The minimum amount you can stake
- Locking periods for staking funds
- Commissions charged by the platform
Reputable staking platforms will never hold back any information or clauses from their users. As a result, you can be sure something is not right if that is not the case.
Clear pricing and fee structures are also signs of reliability. Additionally, be wary of platforms that claim to offer very high staking rewards.
The Project Team
The founders and team of the platform should be your second consideration. Visit the team page of the staking platform and read about the members. Do they have enough experience and skills to run the platform? What are some successful projects the members worked on in the past? Are they from the blockchain or crypto industry?
The more answers you get, the more confidence you will develop on the platform. Additionally, head over to Twitter accounts and social media profiles of the team members. You can also visit LinkedIn to verify their identities and mentioned experiences.
Never trust what the founders or teams say on their website. Research thoroughly as it is very easy to fake identities or make up a story on the internet.
Cryptocurrencies are volatile by nature. As a result, any stakeholder tied with the crypto ecosystem is also likely to suffer disruptions and hiccups. Therefore, it is of utmost importance to research the financial health of your staking platform.
Otherwise, your funds can go down along with your staking platform. Additionally, even crypto coins can vanish from the market leaving coin holders in dismay. Currently, there are around 9,000 tokens in the market while over 16,000 are listed, as per International Monetary Fund.
So, always ensure the staking platform you select can handle the costs of running and governing it. Look for any signs of financial crises or disruptions in the past. Try to dig up as much information as you can to make an informed decision.
Additionally, stay with trusted sources while you research the financial health of staking platforms. Stick to data from portals like CoinMarketCap or CoinGecko for assured reliability. Also, adopt the same approach to research the financial health of third-party services and staking-as-a-service platforms.
Another thing to look out for is years of operation. A platform that existed for five or ten years has more chances of offering a safe and reliable service.
On the other hand, new platforms don’t have the track record or experience to prove their claims. It is always wise to go with experienced players that support multiple networks for peace of mind.
Security should be a top concern when choosing a crypto exchange, according to Investopedia. As a result, research the security of your staking platform before you proceed.
Why is security necessary?
Staking platforms or cryptocurrency exchanges can be targets of cybercrime. Hackers can get access to a platform’s data and steal private information. They can also compromise the funds and make your digital assets disappear in minutes.
Recently, the crypto exchange Bitmart experienced a similar incident. Hackers were able to get access to the platform and withdrew a staggering $196 million from the portal. However, according to analysts, the total cost of the security breach can reach $200 million.
Events like these are not very uncommon in the crypto world. As a result, reputed staking platforms go an extra step to ensure data protection and top-level security for users.
Head over to the staking platform you want to choose and check for security protocols like:
Two-Factor Authentication (2FA)
Most apps and websites today support 2FA. It adds an extra layer of security and secures your account on different portals. 2FA is at work when your net banking app asks for an OTP sent to your phone when you sign in.
Similarly, you should be able to set up 2FA for your account on your staking platform. It prevents unauthorized access and is a basic step to strengthen your account security.
All leading crypto exchanges and staking platforms use data encryption to protect user information. Encryption locks your data with a unique key that makes it less likely to be intercepted by cybercriminals. A system or user can only decrypt or make sense of the data when they possess the same unique key.
Websites can use several ways to implement data protection. The most fundamental is using a secure HTTPS connection to prevent malicious traffic.
In addition, crypto staking platforms use TLS or SSL certificates to ensure secure communications.
Governance Support & Community
Crypto projects can be quite innovative and exciting. Project founders are highly proud of their projects and show an active interest in furthering the cause of decentralization. Additionally, they eagerly participate in the protocol governance and release regular updates.
You should be able to spot the same kind of enthusiasm from the team of your platform. It should be highly active and be a regular participant in discussions and debates.
However, adopt caution if you find a lack of interest and discussion on issues of governance. It may indicate the founders are not encouraged to continue the project. The platform may also be developed to facilitate frauds on the behalf of miscreants.
In addition, founders always support and make an effort to grow and serve the community. You will see blogs, podcasts, and more to fuel the expansion of the ecosystem. Additionally, the team members will be thronging to Telegram and other channels to converse and interact with the community.
On the other hand, unreliable projects are less responsive on forums and discussion boards. You also won’t see the same kind of enthusiasm to grow the community or the ecosystem.
In such cases, be careful and do more research to ensure the staking platform is legit.
User Reviews and Comments
The opinion of others can help you form a strong idea of a staking platform. You can read reviews left by authentic users on resources like Mouthshut.com or Trustpilot.com. Be sure to read the negative reviews to find out if something is wrong with a staking platform.
In addition, head over to social media platforms like Twitter and Reddit. You can read what other users feel about the project or staking platform. Developers here can identify signs of fraud or any vulnerability in code or white papers.
As a result, you can become aware of any foul play or suspicious signs and prevent risking your funds.
Moreover, look for media coverage of the portal and reviews by experts and industry publications. They can give you an idea about the potential and trustworthiness of a staking platform.
However, stay with reputed sources that are known for providing honest and accurate information.
A few additional things to determine are the uptime and supported currencies of a staking platform. You don’t want to stop earning rewards due to the poor performance of a platform. Additionally, rely on reliable analytics to make up your mind.
Adequate research can help you choose a staking platform with full confidence. Start by researching the reputation of the project and its financial health. In addition, dig up more information about the team members and verify their identities and professional experience. Moreover, consider the security implications of your platform and go with a service that offers complete peace of mind. In the end, read some user reviews and news articles to find out if the platform is reliable. We wish you all the luck you need to research thoroughly.