Any serious cryptocurrency investor will know that instant returns on investments are hard to predict. You can’t spend every waking minute checking price fluctuations for the perfect time to sell. Equally, you can’t know which of the over 12,000 crypto tokens is the right one to post 1000% returns into the next month. Instead, financial advisors suggest holding onto crypto investments for at least two years. Ideally three, or even five. It’s not music to crypto newcomers’ ears, but it’s the best way to make your crypto investments work. Luckily, you don’t just have to let your money sit there gathering dust. In this article, we’ll look at how staking and rewards can help you make passive income from crypto investments in 2022.

What is staking?

Staking works similar to a savings account that pays interest. You can stake a portion or all of your cryptocurrency holdings (with a token that allows it) for a percentage-rate return on the investment. Returns are usually paid in the native token, and even the biggest crypto tokens offer staking pools to new investors. 

Staking-enabled cryptocurrencies usually employ what is called ‘proof-of-stake’ methodology to ensure transactions are validated and safe – without a bank or processor in between Using an exchange is usually the quickest way to start staking, and some of the biggest exchanges like Coinbase allow staking in ETH2, USDC, DAI, ATOM, ALGO and XTZ. Any rewards are immediately paid into your account according to the schedule provided by your crypto exchange. While staking can help you make more from your investment (especially if you’re already planning to hold your position for some time) there are dangers involved. For starters, staking does not save your investment if the token’s price falls during the time you’re holding it. Secondly, be aware that platforms may seduce investors with huge payouts. Do your research, and vet any project before you decide to stake.

What are rewards?

Rewards tokens are cryptocurrencies that pay out a reward to coinholders. Like staking, it’s a means for investors to watch their initial deposit grow. However, rewards are paid out regardless of entering into a staking contract. This can reduce the risk of your investment, however may also see you earning less money depending on the rewards policies. 

With top rewards tokens like SafeMoon, rewards are paid out in the native SAFEMOON token. The SafeMoon protocol pays out rewards proportionally to the size of your holdings. APY (Annual Percentage Yield) is dictated according to trading volume, so can vary depending on how many people are trading that token each day. Another top rewards-paying token is EverGrow Coin. This project recently partnered with SafeMoon, however, is different in that EverGrow Coin pays investors in Binance pegged US Dollars (BUSD). BUSD is a stablecoin equal to the value of the US dollar. This means the value of rewards is not tied to fluctuations in $EGC price and gives added value to investors. To date, EverGrow Coin has paid over $34 million to investors in BUSD rewards despite launching only in September last year. 

While staking is the better known option, rewards tokens are becoming increasingly popular as they offer daily rewards whilst leaving you with full access to your tokens, rather than locking them into a staking contract. As with any investment strategy, do your research, check the project’s white paper as thoroughly as you can, and be prepared to hold long term.

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