Passive income has become the catchphrase of choice for many investment advisors, and cryptocurrencies offer a unique opportunity in this regard. Proof-of-stake (PoS) as a consensus model has several advantages, and PoS cryptocurrencies like Cronos are growing in popularity as investors discover how to stake CRO and earn from it.
As inflation reaches levels not seen in decades across the entirety of the developed world, retail investors are increasingly finding out that earning a yield on investments is important. A far cry from degenerate yield-chasing employed by institutional investors, staking offers ordinary smallholders a chance to see their assets grow along with living costs.
Pure asset appreciation doesn’t always do the job, and the markets don’t always go up. Cryptocurrencies like Bitcoin are difficult to earn with unless you splurge on expensive mining hardware, and even Ethereum isn’t a good source of passive income just yet. Currencies like CRO, however, can be staked and accessed easily, providing both a source of income and additional benefits.
What is Crypto Staking?
Staking, in general, is viewed as the process of locking up a crypto asset in a manner similar to a fixed or term deposit with a traditional financial institution. With one of these financial instruments, you deposit your funds with a bank for a set amount of time, and the bank pays you a certain rate of interest.
This is loosely true with crypto, although staking is a little more nuanced than that. At its purest, staking crypto means bonding funds to the smart contracts at the heart of the blockchain’s protocol and running validator hardware to help produce blocks and secure the network. This is certainly true in Ethereum’s case.
In a delegated proof-of-stake blockchain like Crypto.org Chain, holders can delegate their CRO tokens to other validators if they don’t wish to operate a node. This is a less involved but still completely legitimate way of devoting CRO toward securing the network.
In both cases, the staked coins are locked for a certain amount of time, and the validator who locks them (or has received delegations) has a certain chance to be chosen as the producer of a block. The more they stake, the higher their chance of being the block producer and of earning the block reward. This block reward is what defines the staking yield, compared to a bank that turns around and lends your deposits to a borrower in order to pocket the difference in rates.
It’s important to note that “staking” is a term that’s often used very loosely. Many crypto exchanges offer “staking,” but if you choose to lock your coins this way, there’s no guarantee they’re being put toward network security. Luckily, regulators are on the front foot with regard to this practice of misleading investors.
What is Cronos (CRO)?
Cronos, previously known as the Crypto.org Coin, is the native token of Crypto.com’s Cronos blockchain and the Crypto.org Chain. It was launched in 2018 as an ERC-20 token on Ethereum but migrated to Crypto.com’s blockchain ecosystem when they went to mainnet.
The Cronos blockchain was developed using the Cosmos SDK but is also EVM-compatible. This gives it a huge amount of interoperability since it supports Cosmos Inter-Blockchain Communications (IBC) but can also host Ethereum and EVM-based decentralized applications.
Crypto.org Chain is a Byzantine Fault Tolerant network leveraging Tendermint Core for consensus, meaning that the CRO token is at the very heart of it. As mentioned, stakers can bond CRO to the network in order to participate in consensus, governance, and block production.
The token has plenty of other utility across the Crypto.com ecosystem, from entitling stakers to cashbacks when they use Crypto.com debit cards to additional access to exchange listings and trading fee discounts.
How Does CRO Staking Work?
The CRO cryptocurrency can be considered to use a form of proof-of-stake that allows delegation on the Crypto.org Chain. This means that holders of small amounts of CRO can take part in network consensus by delegating their tokens to the operators of validator nodes. As long as these validators perform, the delegators can earn a share of their block rewards.
Delegation is important because it allows anyone to participate and eliminates most requirements in terms of minimum staking amounts and hardware requirements. What delegators need to pay attention to is which platform they use and which validators they choose to delegate to.
A poor choice of validator doesn’t mean you lose all of your tokens, though. It simply means that the rewards you earn may not match what other delegators are able to earn by choosing reliable validators. On the other hand, staking CRO and running a validator node also carries the risk of token loss through slashing, the maximum penalty for misbehavior as a node operator.
When you delegate your CRO, you will earn your share of the validator’s block rewards, minus the fee they charge for actually operating the hardware and maintaining 100% uptime.
How to Stake CRO
There are several options, all within the Crypto.com ecosystem, concerning how to stake your CRO. You may see that terms and reward rates differ based on which platform you use, so it’s wise to consider your options carefully.
#1. DeFi Wallet
A DeFi wallet, or simply your own private or non-custodial wallet, is generally the best way to stake any cryptocurrency. If an exchange gives you the option to “stake” a cryptocurrency, but you can’t find a way to do so with your own wallet, then you know that it’s not actual staking that’s being advertised.
Once you have a wallet compatible with the Crypto.org and Cronos blockchains, such as Crypto.com’s own DeFi wallet, you can get started. First of all, ensure that your CRO token addresses begin with “Cro” rather than “0x.” The latter are ERC-20 CRO tokens for Ethereum and can’t be staked.
If you’re using the Crypto.com DeFi wallet, you can navigate to the app’s “Earn” tab and then “Start Earning” to take a look at the list of validators you can delegate to. It might be wise to do a little due diligence on the validators before selecting one because their performance will determine whether you receive the promised rewards.
#2. Crypto.com Exchange
Exchange staking is still a big part of the crypto landscape, and centralized firms are all about taking custody of your assets. So-called staking is the incentive that exchanges will provide you to lure into staking with them rather than do it yourself using your own wallet.
What this means is that the exchange can do whatever they want with your crypto as long as they provide you with the promised returns. It’s unlikely that Crypto.com would take too many risks with its own token, but FTX has shown that malpractice, even to a criminal extent, isn’t beyond what a billion-dollar exchange would consider.
If you’re willing to risk your funds being held by an exchange, then exchange staking is a good option for the convenience it brings.
#3. Crypto.com App
You can also stake CRO on the Crypto.com app. This is usually tied to the exchange’s selection of debit cards, since that was one of the first fundamental reasons for the CRO token’s success. Once you download the app, register for an account, and go through the verification process, you can buy CRO.
Then, navigate to the “Cards” section before choosing a card and finding the “Stake CRO” option associated with it. As with exchange staking, though, keep in mind that if you’re not prompted to choose a validator to delegate to, you’re not staking to the protocol itself but rather giving your tokens to Crypto.com in the hope of being paid interest.
Benefits of Staking CRO
Now that you know what staking is and how to stake your CRO tokens, let’s take a look at why staking CRO can be beneficial to you.
- Passive income. It’s one of the biggest catchphrases in investing, but the power of having a regular stream of income without having to lift a finger is alluring, to say the very least. CRO is an easy token to buy and stake in different ways and can provide the sort of yield that helps to offset the cost of inflation.
- Asset appreciation. CRO has had a wild ride since its launch, and the platform behind it has considerable marketing reach and one of, if not the best, domains in the space. Many CRO holders have benefited from the token’s appreciation, and earning more of a valuable asset through staking is the icing on the cake.
- Scarcity. Staking, especially pure staking via a non-custodial or DeFi wallet, eats away at the supply of a token. While supply and demand don’t always hold when custodians come into the picture, CRO staked to the protocol itself is temporarily illiquid, meaning the token’s price may trend upward as more tokens get locked away.
- Network security. Having more and more tokens staked to the network also improves its security. Given that a breach in security means that the blockchain and its transaction ledger can be compromised, you can play a part in securing your investment by staking CRO.
Cons of Staking CRO
Staking CRO, while beneficial, also comes with a handful of downsides. Let’s take a look at what they are:
- Liquidity. While the overall liquidity of the token doesn’t affect you in the slightest, staking often imposes a restriction in terms of how long you need to stake and how long it takes to unstake. Therefore, your tokens can get locked up for that time. This removes your ability to liquidate them during that time frame, should you so desire.
- Custodial risk. FTX, BlockFi, Celsius, Voyager, Genesis, etc. Far too many crypto custodians have been decimated for various reasons, from crime to incompetence and woefully inadequate risk management. Crypto.com appears to have weathered the storm of 2022, but more crypto holders than ever are now aware of why they shouldn’t let anyone else custody of their tokens, irrespective of the promised yield.
- Crypto crashes. While crypto has been an extremely lucrative asset class in general, the second lesson of 2022 was that the market doesn’t just go up. You can still be getting a great yield in terms of APY, but that becomes less attractive if your investment principal plunges by 90%.
- Crypto.com dependence. Tied to the above, the CRO token is very dependent on the success and products of the Crypto.com exchange platform. If the platform and products fail, then the token’s value is likely to be wiped out as well.
How to Collect CRO Staking Rewards
Using the Crypto.org DeFi wallet, you can claim the staking rewards you have accumulated whenever you want.
Staking activities in the DeFi wallet are controlled under the “Earn” tab, which is how you staked your CRO tokens in the first place. So, to collect your rewards, click on Earn before navigating to the “Chain Staking Details” screen.
Below the validators to whom you’ve staked, you’ll see an option to claim rewards. Once you press this button, you can choose whether you want to claim the rewards for your wallet or claim to restake. The latter option allows you to compound the gains you make through staking.
You can then confirm your decision using your passcode and 2FA if enabled, and you can track the transaction for withdrawal or restaking on the blockchain.
How to Unstake CRO
Just like with staking and claiming rewards using the Crypto.org DeFi wallet, you can unstake your CRO tokens using the “Earn” section of the wallet.
First, you can view your staked balance to check how many CRO tokens you have delegated to different validators. With that amount in mind, you can click “unstake” in order to free your CRO backup. Note that you can unstake as much or as little as you want.
As with collecting rewards, you’ll have to confirm your decision and authenticate it using 2FA. Once this is complete, your unstaked tokens will move into the “unbonding balance” section of the interface.
As with many cryptocurrencies, there’s an interval during which your coins are locked up when you decide to unstake. This is a mechanism that prevents pump and dumps and enhances the stability of the coin’s price. So, while you can unstake at any time, you can’t use your unstaked tokens immediately.
After the 28-day unbonding period is complete, your CRO tokens will be shifted fully into your account balance, and you’re free to do whatever you like with them!
Key Takeaways
Staking is crucial to how many modern cryptocurrencies work, and while many regard it merely as a small passive income stream, it helps secure the underlying blockchain. CRO, the native token of the Crypto.com ecosystem, plays this exact role on the Crypto.org Chain, and holders can stake it via the Crypto.org DeFi wallet.
Not all stakers have to run a validator node, either. As a delegated proof-of-stake network, the Crypto.org Chain allows holders to delegate their tokens to validators. While the node operators will take a small cut, this allows delegators to earn direct rewards from the protocol while helping to secure it.
How to Stake CRO FAQ
How much CRO do you need to stake it?
The CRO token has no minimum amount when it comes to staking. In contrast to high minimum requirements on other chains such as Ethereum (32 ETH required), this open approach to delegation allows anyone to take part easily, irrespective of the amount of CRO they have.
When can I withdraw my staked CRO?
If you use the Crypto.org DeFi wallet, you can withdraw your staked CRO from the ‘Earn’ section. You can also claim rewards there or redelegate to another validator without the 28 freeze that withdrawal normally entails.
What are the risks of staking CRO?
Given the 28-day unbonding period, it’s clear that staking prevents you from selling your tokens quickly. This may cause you to miss sudden or temporary spikes or drops in price, although it tends to stabilize the coin as a whole since stakers can’t “panic sell.”
Is CRO staking worth it?
If you understand the risks inherent to staking as well as the fundamental value of the CRO token itself, you may decide that CRO staking is worth it. Staking implies a long-term hold, so the asset needs to have good fundamentals, and you need the conviction that it’ll do well against fiat in the long run.
Can you stake CRO on Coinbase?
No. For now, you can only stake CRO within the Crypto.com ecosystem. The Crypto.org DeFi wallet is the best choice to stake CRO since other options imply needing to give Crypto.com custody of your coins.
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