AVAX Staking: Everything You Need to Know

close up shot of silver and gold round coins

Have you been investing in cryptocurrencies but are tired of the instability of the market? Are you tired of watching the value of your investments continually fluctuate?

Many cryptocurrencies are Proof-of-Stake (Pos) to ensure that investors can earn money long-term consistently from their initial investment. AVAX staking is an example of this.

But, how does staking work, and why should you use AVAX for your staking services? We are going to review all of this for you in this article, so keep on reading!

What Is AVAX Staking?

When you stake AVAX you lock up your AVAX tokens to earn rewards. The AVAX staking minimum is 10,000 AVAX to be able to participate. You are free to stake all of your tokens at once or over some time.

The longer you stake AVAX, the higher your earned rewards will be. You are always free to unstake whenever you please. Just know that by doing so you will earn rewards at a lower rate.

The process includes you sending your AVAX to avalidator. A validator’s job is to verify and validate transactions on the Avalanche blockchain. The validator earns a piece of the rewards pie generated by the network.

AVAX staking not only helps you with your investments but also helps secure the network.

How AVAX Staking Works

Now that you’ve got some understanding of AVAX staking, how does it work? The Avalanch wallet makes the process look very simple, but what’s going on in the background is super interesting.

Delegator

A transaction will be created via the wallet known as a “certificate”. This certificate is a “legal document” that communicates with the blockchain. It’s essentially letting the network know that you are designating a validator the right to vote on your behalf.

To sign this certificate, you will be asked for your wallet password. Once the certificate is signed, the data gets broadcasted to the network. Anyone who desires to can see that your coins are being delegated to your chosen validator.

Validator

If you’d like to become a validator node you are free to do so. You will need a minimum of 2,000 AVAX. The amount is high to prevent malicious parties to defraud the system.

You will be responsible to keep the node running online 24/7 to verify new blocks and mint new AVAX.

The Avalanche Blockchain

The Avalanche blockchain features 3 built-in blockchains. These are the X-Chain (Exchange Chain), P-Chain (Platform Chain), and C-Chain (Contract Chain).

X-Chain

The X-Chain is used to create new asset classes. This is the main asset chain on Avalanche. Holding assets in an X address keeps them liquid as you are free to transfer them to X or P addresses.

P-Chain

The P-Chain manages metadata (i.e. staking). Holding assets in a P address makes them illiquid. If you wish to transfer assets from a P address to another, you will first have to send them to an X address.

C-Chain

The X-Chain and P-Chain are involved in the staking process on the Avalanche network. The C-Chain on the other hand enables smart contract functionality for dApps (decentralized applications).

The Benefits of AVAX Staking

AVAX is one one the more popular cryptocurrencies (and for good reason). AVAX staking is an attractive option to crypto investors since it offers an easy way to earn passive income. If you’d like to stake AVAX, there are a few things to keep in mind.

You can stake AVAX on an exchange or with a non-custodial wallet. Staking via a non-custodial wallet will increase your security, especially with cold storage.

AVAX staking rewards are paid out in AVAX, so we recommend becoming comfortable with holding and managing your private keys. Always remember the mantra: not your keys, not your crypto

Keep in mind that the amount of AVAX you can stake is limited to the amount of disk space on your computer.

How to Get Started with AVAX Staking

To get started with AVAX staking, you’ll need to first purchase some AVAX on an exchange.

Let’s discuss how to stake AVAX via the Avalance Wallet.

  1. Click “Earn” from the menu on the left
  2. Enter in the amount of AVAX you wish to perform a cross-chain transfer (P-Chain)
  3. Click “Transfer”
  4. Select a validator from the list of “nodes to delegate”
  5. Specify staking period and stake amount
  6. Confirm details
  7. AVAX staking will start right away

You’ll need at least 25 AVAX to get started. The AVAX staking APY is ~10-12% by the way.

Additional AVAX Staking Terms

With any crypto project, it is well-advised to do your research. We have some key AVAX terms you’ll want to be aware of.

Validator Stake

How much AVAX has the node owner committed? Generally, the more AVAX staked, the greater the chances of the node operator keeping it safe and running.

Available

How many AVAX will a particular node be able to receive in delegations? This will inform you of that. There is a maximum amount for each node (5x the validator stake.)

Delegator Count

This lets you know how many addresses are being delegated to a particular node. The more addresses the better since more people are trusting it. With that said, remember the mantra: don’t trust, verify.

End time

AVAX rewards are a bit different from other Proof-of-Stake (PoS) coins. You won’t receive AVAX every epoch or every block. The difference is that you’ll be committing to a certain time.

Uptime

Uptime is a dynamic metric. You want to choose a validator node that has an uptime of 60% or more to ensure you are rewarded with AVAX.

What’s at Stake?

We hope you enjoyed our AVAX staking guide. The best way to learn is by doing, so get staking!

As technologies change and update, you’ll want to stay in the loop. To keep up with the latest news and trends surrounding the cryptocurrency market, be sure to browse through our blog. Happy investing!

Blog at WordPress.com.