This lesson will cover how staking works on Huobi Global, the advantages of staking via the exchange instead of doing it yourself through DeFi protocols and how to participate in staking through Huobi Global. If you are unfamiliar with staking, read our lesson on PoS before proceeding.
You can also read the following lessons for more passive income knowledge:
How staking works on Huobi Global
Staking is the process of locking tokens with a crypto wallet to support blockchain network operations, such as creating and validating new blocks in a blockchain. PoS systems randomly assign validators to validate and create new blocks; the validators are in turn rewarded for doing so.
Small token holders tend to have a lower chance of being selected for the aforementioned process and thus, a lower chance of earning rewards. To increase their chances, token holders often combine their resources to create staking or token pools, allowing them to receive rewards in proportion to their contributions to the pool.
The main challenge in setting up a staking pool is that it is often time-consuming and highly technical. Additionally, staking pools are typically the most effective on networks with higher barriers to entry. This is why pool providers usually charge pool participants a fee, automatically deducted from the staking rewards earned by the participants.
Staking through Huobi Global can be likened to adding tokens to a staking pool — but without any fees incurred. You are also spared the trouble of going through any complicated processes as the only thing required from you is that you hold your PoS tokens on Huobi Global, which will take care of all the technical requirements.
You can check on the current staking possibilities aqui. After selecting a specific token-staking contract, you can view the relevant rules on a separate page.
Advantages of staking through Huobi Global
While there are advantages to staking without a third party like Huobi Global, there are at least three good reasons to use the exchange’s services, especially for newer users.
Firstly, Huobi Global’s staking product is easy to use. You don’t have to manage private keys, sign off on transactions, locate nodes, perform other tasks or possess specific qualifications to participate in staking. With Huobi Global, you can stake your tokens in a couple of clicks, without the intricacies of an on-chain wallet.
Secondly, you don’t have to worry about losing your tokens, since Huobi Global oversees token storage. It also selects only trusted projects for its staking product and monitors their systems in real-time to ensure the process is run smoothly.
Thirdly, you can enjoy high earnings without additional fees, as Huobi Global shares the revenue from validator rewards. Do note that the APY will fluctuate according to actual income.
Despite these benefits, however, Huobi Global still strongly encourages crypto users to transfer tokens, keep them in their own custody and use them privately. Our goal is crypto adoption, which means you should own your tokens. Remember: not your keys, not your tokens!
Demonstrating the staking journey
Staking on Huobi Global a simple process and an excellent way to put your idle tokens to work. The following steps will show you how it’s done:
1. On the Huobi Global homepage, click on Staking under the Finance drop-down menu.
2. Choose a token you want to stake. We will use LUNA in this example.
3. Enter the amount you want to stake, then click on Stake now. Before you proceed, be sure to read all the relevant information on the page, such as ‘Delay’ (unlocking time) and ‘Staking rules’.