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Staking crypto assets is a great way to earn passive income. But are your assets secure? Unfortunately, if you’re not using a hardware wallet, the answer is no.

Perhaps you’re just getting started with staking and want to prioritize security from day one. Or maybe you’re a crypto veteran who wants to move to a more secure setup? In either case – this article is for you.

While there are a few reputable hardware wallet manufacturers, we'll focus on just one in this article - Ledger. It offers excellent security, ease of use, and tight DeFi and Web3 integrations, making it the best option for staking.

Wait, what's wrong with staking from my hot wallet?

Hot wallets have major security flaws. As a result, they are targets for hackers, phishing attacks, and social engineering exploits. If you’re using one to stake crypto, you are taking a chance at becoming a victim. Think becoming a victim is unlikely? It’s not. One of our very own at Blocks United lost the equivalent of 35k USD in a Telegram phishing attack using a Metamask hot wallet. And he is far from the only one. Here are a couple of horror stories about people getting fleeced for their crypto to illustrate the point:

DeFi Founder’s Hot Wallet Hacked

5 Devastating Hot Wallet Hacks

The moral of the stories above? Beware of phishing attacks and take all necessary precautions. As convenient as they are, hot wallets on your computer or mobile device are not secure. Earning passive income doesn’t matter much if your assets are compromised. A hardware wallet is the answer.

What is a hardware wallet?

If you’re already familiar, please skip ahead. If not, let’s start with a brief explanation.

A hardware wallet takes the approach of complete isolation for your assets. They store your private keys on a dedicated physical device built from the ground up for one thing – secure key storage.

These devices provide state-of-the-art encryption and do not connect to the internet. Not only that, they require an actual human to press an actual button to approve transactions.

What is a Ledger wallet?

In our opinion, Ledger makes the best hardware wallets in the industry. We use them exclusively at Blocks United.

There are two products appropriate for staking, the X and the new kid on the block, the S Plus. In addition to the hardware, they provide the Ledger Live Application.

Let’s touch briefly on each before continuing. If you’re already familiar and just want to learn how to stake, please skip ahead.

We are not affiliated with or compensated by Ledger in any way. We're just fans of their products.

The Nano X is Ledger’s flagship product. It has the highest price tag (USD 149) but also the most features, including:

• Support for 100 apps
• Large screen (128×64 px)
• USB-C
• Ability to connect via Bluetooth
• CC EAL5+ Security

The X has been around a few years and is our product of choice for staking. It integrates with most DeFi and Web3 protocols, and you can use it with mobile through Bluetooth. These features make the higher price tag worth it. But if you don’t need Bluetooth…

Ledger Nano S Plus

The Nano S Plus is Ledger’s latest product. It boasts improved app coverage and larger screen size. But most importantly, it can now manage NFTs and integrate with the same Defi and Web3 services as the Nano X.

The only difference with the Nano X is you must connect the Nano S Plus through USB (no Bluetooth). If Bluetooth connectivity isn’t something you need, this is a clear choice.

• Up to 100 apps
• 128×64 px screen
• USB-C
• Certified secure chip (CC EAL5+)
• Developer-friendly
• Ledger Live App

With Ledger Live, Ledger provides a one-stop shop for managing your devices. It works with Mac, PC, and mobile and allows you to:

• Install and update apps on the hardware devices
• Update device firmware
• Send and receive crypto assets
• Manage NFT’s
• Connect to DeFi and Web3 apps (including enabling you to stake)

Connecting your Ledger device to the Ledger Live app is done through USB or Bluetooth. Once connected, the software does a great job walking you through everything.

How to setup Ledger for Staking

Staking with a Ledger is straightforward once you have everything set up. So let’s do that first. We need to download Ledger Live, set it up, configure the Ledger wallet, and send it some crypto to stake.

Once setup is complete, you’ll be ready to stake coins and start earning rewards.

Step-by-step Setup Instructions

• Download and install Ledger Live
• Setup your Ledger hardware wallet and configure the Ledger Live app
• Install blockchain apps
• Add your crypto accounts
• Familiarize yourself with the Ledger Live interface
• Send crypto assets to your Ledger device

How to Stake with Ledger

The recommended way to stake with a Ledger hardware wallet is to connect it to a browser-based or app-based wallet. This setup allows you to marry convenience with security. For illustration purposes, we’ll walk you through the process with one of our favorite hot wallets, Keplr.

Please note that there are many ways to stake with Ledger. The following example is typical, but some steps may vary chain-to-chain.

Example: How to use a Ledger Hardware Wallet with Keplr to Stake ATOM

First, please ensure you've performed the following steps:

1. Add the Keplr Chrome extension.
2. Make sure you have the latest Cosmos app installed on your Ledger
3. Close the Ledger Live App (it can have conflicts with Keplr if both are open)
4. Next, connect your Ledger to Keplr:
5. Connect your Ledger to your computer or mobile device via USB or Bluetooth
6. Open the Cosmos app on your Ledger
7. Access your extensions menu in Chrome and click on the Keplr browser extension
8. Select “Import Ledger”
9. Enter an account name and password (save these securely – password managers are a great option!)
10. Check the “Use alternative USB connection method (HID)” checkbox
11. Click “Next” then “Done”. You should now be successfully connected and ready to stake!

The above assumes you've moved enough assets into your account to stake. You also need to have enough funds left over to pay gas fees. Never stake 100% of your tokens. If you have 100.34 ATOM, only stake 100 and leave the spare change to pay for future fees (like claiming rewards).

Staking through the Keplr App

Step 1: Open Keplr. You can either go to the Keplr Web App directly. Or, you can click on the “Stake” button from the Keplr browser.

Step 2: Browse Active Validators. There are currently 175 validators to choose from, which can be daunting. For help choosing, please read our article, How to choose an ATOM Validator.

Step 3: Choose a validator. You're certainly welcome to stake with us at Blocks United. Once you’ve chosen a validator, click the “Manage” button. This will bring up the delegation modal for the selected validator. Click “Delegate”.

Step 4: Enter Delegation Amount. Enter the number of ATOM you wish to delegate in the “Amount to Delegate” field. Then, click “Delegate”. Then, click “Approve” on the following screen. Click Approve

Step 5: Connect Ledger via Browser. Make sure you have the Cosmos app open on your Ledger. Then, if you are prompted by Chrome to connect, choose your device and click “Connect”.

Depending on how long it took to execute the previous steps, you may need to re-enter the passcode on your Ledger. If you don't see your device in the window above, this is probably why.

Step 6: Approve the transaction. You will now be prompted to view and sign the staking transaction on the device. Use the buttons on the Ledger to review each field. If all looks correct, select “Sign Transaction”.

You should now be staked with Ledger!

The above assumes you've moved enough assets into your account to stake. Never stake 100% of your tokens because you'll need a little leftover to claim rewards.

FREQUENTLY ASKED QUESTIONS

1) I want to buy a Ledger hardware wallet; where can I get one?

Never purchase a hardware wallet from Amazon or any other online marketplace. The risks are too high that the device could be compromised. Instead, buy direct from Ledger.

2) What is the reward rate for staking with Ledger?

Rewards vary between blockchain networks. For example, if you stake ETH you will earn less than 5%. On the other hand, rewards are in the 15%+ range if you stake ATOM.

3) Are there costs associated with staked tokens?

Yes. Validators receive rewards by taking a percentage of your rewards as commission. The commission rate can vary depending on the network and your validator.

At Blocks United, we charge 5% on average. So, for every 25 tokens you earn in rewards, we take 1. We use these funds to pay for high-quality infrastructure and other operational costs.

4) Which coins can I stake on Ledger?

You can stake on most of the industry’s best projects. Please visit Ledger’s listing of supported coins for the most up-to-date information.

5) Is staking crypto assets with Ledger safe?

Using a Ledger wallet is one of the safest ways to stake your crypto. But staking on any blockchain network has risks. Money of any kind is always a target for the bad guys.

6) What happens if I lose my Device?

Each device comes with a recovery phrase, just like any digital wallet. The words of your recovery phrase must be carefully guarded. The best practice is to store them somewhere secure, such as a safety deposit box.

If you thought this post was helpful, or have questions or comments, please leave them below.

Proof of Stake

Proof of Stake is the validating of transactions en the creating of blocks on the blockchain by 'staking' a certain crypto. This is a concensus mechanism.

In Proof of Stake there are no miners, but validators. They don`t mine blocks, but forge blocks.

The rewards you get for staking your coins are the transaction fees, from transactions in the block.

Proof of Stake Lottery

The chances of solving a block can be compared to lottery tickets. This usually depends on your 'stake'. Let`s say there are a 100 coins and you own 1 coin, you have a 1% chance to solve a block.

Delegation Mechanism

With special wallet software a user has the ability to 'delegate' their stake to another user. The more coins are delegated to one user, the higher the chances of solving blocks are for that user.

More blocks = more rewards and these rewards are shared among all the stakeholders in a proportion to the staked amount.

Pros and Cons

Pros

• Energy efficient
• Low entry barrier (You don`t need expensive equipment as in Proof of Work)
• PoS cryptocurrencies are generally faster than PoW cryptocurrencies

Cons

• Users with many coins can have a big influence on the consensus proces.

Staking seems to be an integral part of many DeFi cryptocurrency projects as liquidity is always sorely needed, but I find many DeFi staking protocols to be akin to a ponzi scheme. Often staking results in more tokens, which just results in runaway inflation. There isn't anything innovative about depositing your tokens to receive more tokens and inflating the value of your assets away.

What projects are you following that are making staking innovative? The only ones I'm aware of are chainlink and Mithrilverse.

Chainlink is using staking to enhance security by creating a watchdog incentive for reporting network attacks, and disincentivizing malicious attacks. Mithrilverse is building a high-fantasy metaverse and using staking to generate an inflationary internal currency so you can participate without spending your Mithril to do so. It's a unique take on holding an asset to gain access to a broader ecosystem.

What other projects are you aware of that are innovating in the area of staking?

A few months ago, some crypto news outlets reported that the IRS issued a tax refund to the Jarretts, a couple who had paid taxes on staking rewards.

Immediately, it felt like people were celebrating because it seemed like staking was no longer taxable.

When I heard about this, I was initially excited. But the more I dig into the facts, the more I realize that media outlets probably weren’t portraying the situation accurately. It seems like the IRS was just trying to close this specific case as quickly as possible since there wasn’t that much money at stake.

I thought this article from Coindesk summarized the situation pretty nicely. In case you’re too lazy to read the whole thing, here’s the relevant portion.

Why is the decision a nothingburger? Say you steal a car. The local police department investigates you, comes to believe you indeed stole the car and shares the investigation findings with the county prosecutor. For whatever reason – overworked department, underfunding or plain disinterest – the county prosecutor declines to file charges. Such a decision frees you from legal repercussions, but it does not mean that stealing a car is now legal.

This reasoning is likely behind the IRS’ Jarrett decision. The government lawyer overseeing the matter probably thought, “I am so constrained for time and resources. I have thousands of active cases. I am not going to spend office time and money fighting in court over a $3,000 refund.”

Look, I think the IRS’s position on this is bullshit. I’m rooting for the Jarretts. But I’m still going to report staking rewards on my CryptoTrader.Tax account because I’m trying to avoid trouble from the IRS in the future.

TL;DR: The IRS just wanted to end this specific case as quickly as possible, but it seems like staking rewards are still taxable.

There is a question that has been bugging me for a while:

Let's say you stake your tokens in a pool, for example you stake osmos at 100% APR:

You buy 100 Osmos at 10usd price to stake a total of 1000 usd in osmos at 100% apr. So if the price of osmos stays the same for a year, you get 1000usd in osmos after a year.

But what happens if the price of osmos doubles, does that mean that you get 2k USD after a year in staking rewards?

How about if the price of the token halves , do you get then 500 USD value?

Or is the apr based on the amount of osmos that you have no matter the price of the token?

Thank you for you help

Edit: I think this gets more complex when you stake stake 10 cake for example and you get 100 % Apr in a different token, for example GMT. How do you even calculate the Apr in that case?

I was reading about staking and came across a couple articles about Cylum Finance (CYM). It’s a bep20 DeFi 3.0 token that‘s “newsworthy” because they’re offering 395,677% apy and they say they are low risk because they’ve got a thousand bnb in a cold wallet as insurance against large price crashes. They also have a spelling error 8 words into page one of their welcome doc.

Here’s their blurb from coincodex: *“Cylum finance is an automated network that provides sustainable investment opportunities for its community of users. The network enables users to gain increasing investment benefits by letting their assets function in an attractive and high-producing investment space.

Cylum is a hyper deflationary token with many utilities, hard capped at 5billion, 2% burned at Launch. Investors that HODL,STAKE,FARM $CYM will gain as much as 395,677% in 1 year.”*

Are they complete bullshit or no?

not shilling just asking a question

A few of my terms were nearing their limit so I logged in to CDC today and got the below notification:

_ Upcoming Tiered Rewards Structure (Effective April 4th, 2022)

Tier 1 (Full rewards rate) - You will receive the full rewards rate for allocations less than or equal to USD $30,000. The Tier 1 quota will always be filled first. The Tier 1 quota will be calculated based on the USD price of the cryptocurrencies allocated to Crypto Earn at the time of the allocation and in the order they are allocated. Tier 2 (0.5x rewards rate) - Once your Tier 1 quota of USD $30,000 is filled, additional allocations will receive 0.5x the full rewards rate. _

---

So it seems that we have another example where CDC is slowly cutting their rewards rates (in this case a bit more indirectly). Don’t get me wrong, I love CDC but I’m wondering how long it’s going to be before it’s just not worthwhile to use the Earn program any longer…what do you all think the runway is?

Hi guys, I'm a bit confused how staking works on crypto.com. If I'm staking a coin on a fixed term for 3 months it says the rewards are p.a. (which I'm guessing per year) so how does it work? Like if I stake a coin and get rewards for next year but after the 3 months can I stake the coins again? And do the rewards accumulate if keep on restaking? Like if I get 3% pa and if I restake does it mean for 9 months I'll be getting 6% and after 3months again if i restake for 6 months I'll get 9% and so on? Can I keep on restaking and getting up to 12%?

Hi all,

I'm hoping someone could help me with something.

I'm trying to understand how exacly the inflation level of a coin affects the actual rewards of staking.

If a coin is giving let's say 50% staking rewards, how do I factor inflation into that? How do you work out the real, actual staking rewards of a project?

Let's leave the price movement of a coin aside, and pretend the price stays the same for a year.

I'm tempted to stake some of the projects giving big rewards, but I hear people talking about inflation and I don't really understand it, and if it's actually worth while staking.

Help!

Thanks.

Hi guys! I have two spare servers that I could use to run a validator for a PoS crypto and earn some passive income. I'm looking for PoS especially because I don't have the time to try and acquire delegated stake from others for a DPoS chain. To put it simply, I'm looking for something like Ethereum staking where I create my own validator for my coins and earn passive income with (almost) no intervention required.

Is there any crypto like that anymore? Everywhere I look it's either DPoS or "offline staking" like Algorand where there's no incentive for running a node.

Would also be great if that crypto didn't require $100k to start a node 😅

Shill me your small marketcap, PoS coins!

I want to set a profit taking plan soon, I want to turn this profits into stable coins that I can stake.

I saw recently that gemini is a solid option, so is celsius. But I want to play it as safe as possible, which means insuring the money, and the fee for celsius on nexus mutual is over 15%.

What do you guys feel is the best balance between stable coin staking, and insurance, which coin / staking platform / insurance? I don't mind sacrificing some profits for that.

As everyone always mentions... Beats the profits from the bank by a lot.

Thanks!

Edit1, ok it seems that going aggressive for ust on anchor is the most popular choice. Thanks, yah legends!

I’ve been looking for somewhere to put my AVAX to work. Since Crypto.com lowered their rates, I’ve begun moving all my assets off the App and into non-custodial investments. Staking or Farming.

I came across yieldyak. Site looks nice but I landed on the avax/deg pool trader joe. It says something like 2,000% apy. I’m in the avax/deg farm pool on trader joe and the apy is 298% now. Why does yieldyax show the pair w traderjoe but have such different rates than traderjoexyz actually has?

The TVL is also significantly lower which would make sense for the apy.

I guess when I was on the site, it seemed like yieldyak was advertising rates for other places. Maybe that’s why I’m confused?

Yes I’m aware of IL Yes I know be careful Yes I know the high rates come w risk

Why does yieldyak say traderjoe and nexo and etc under the pairs?

Maybe I dont get apr vs apy.. but I had 300 ish ada.

It said lifetime earnings 8 ada.

Next day.. it said 9.. I got about 200 more... a day later... my rewards are almost 11.

Now... im not a math teacher... but that seems like about 1/3 of 1%.
In a day... Which is about 100% in a year before compounding.

What am I missing here to make this make sense? Is there something about apy vs apr that causes it to give more than you would think it should?
Would this also pan out the same on other platforms offering APY or is this something unique to coinbase?

Edit: that answers that.. they just disabled it. Was bugged.

Edit: and now its back... see if the rate slowed.

Since Ethereum was launched in 2015, the dream of moving to proof-of-stake has been in the minds of every core-developer. In Q2 of 2022, it will become a reality, as Ethereum undergoes “the merge”. It will be the culmination of years of work by hundreds of people, and once completed will go down as one of the greatest achievements in the history of cryptocurrency. Once finished, Ethereum will have completely moved from a “Proof of Work” based consensus mechanism, to the more secure, scalable, and energy-efficient “Proof of Stake”. It’s importance cannot be overstated, as proof-of-stake is a necessary move to ensure the long-term sustainability of the network. While many have lamented the incredibly-slow development process, ensuring the utmost care and security during the merge-process is paramount.

Read the rest at my website --> https://thecryptoconundrum.net/ethereum_explained/merge.html

Hi all,

When you provide liquidity on a DEX you receive LP tokens in return which indicate your share of the pool. You are now earning a portion of the swap fees when users swap using that pool.

The logical next step is to stake your LP tokens and earn farming rewards from the protocol you choose to stake your LP tokens with.
What is 'staking' LP tokens, what is the service/function you are providing by doing so, and why do protocols therefore incentivize farming by paying you in their protocol's token?

People often claim that some chain is more decentralized than Cardano, because each stake pool operator on that chain has only one pool. And on Cardano, some of them have more pools.

So on Cardano there is a limit of 68M Ada per stake pool, after that saturation point the rewards per pool are reduced. This forces stake pool operator to create more pools if they don't want reduced rewards. This is basically protocol "incentive" which most of other chains don't have. It may be a useless parameters, who knows really.

There are also off chain incentives and they are big. Just think about how nakamoto coefficient (NC) is often used to determine decentralization. So would you rather use a chain that has NC of 30 or 3? For example lets say 3 entities own 20% of staking power each. that chain has NC of 3. Now if they create 10 pools each (2% of total staking power per pool) and every other pool has less than 2% then the NC is 51.

The numbers may be exaggerated, but the incentive is real and it might just be the turning point in adoption and price.

The counter argument is that it is an unnecessary cost to run multiple pools, I think the potential of having higher price per coin is bigger incentive than the cost of running multiple pools.

Some chains may actually have better decentralization, who knows. I know that Cardano is not yet decentralized in all aspects and I'm not here to argue about that, I just wanted to say stop fooling yourself, because why would someone lie on the internet or blockchain about how much is their total staking power, right?

After Crypto.com lowered their interest rate I am looking for some other platform with higher stable coin yield preferably above 9%. The thing is I can’t justify using ERC-20 network so do you know any platform with higher stable coin yield that also allows to deposit stablecoins using other networks that are low cost? TRC, solana, bsc whatever just not ERC-20.

So far I know that there is Anchor protocol with 19% on UST, however I think its too good to be true and tbh it won’t be 19% for much longer, so I guess I have to find something else anyway. I think Nexo has the highest I know of but they only allow ERC-20 deposits which is no-go for me.

Any recommendations are good Thank you!

I have been dipping my toes into staking over the last month, both with cex's and defi with the ultimate goal of spreading my (meager) savings across assets and using crypto as more of a store of value/inflation hedge as opposed to simply an investment avenue.

My savings account, which has "high interest" in the damn name, provides me with about $0.40 per month with a balance around 5k (yes, I had to pause a hooker and blow party to post this).

One month ago I took around $1500 of that and spread it into a few different staking pools (split between cex and defi). I have earned around $8 in that month.

Had I placed the whole 5k in that $8 would have been around $26.

$0.40 in the "high interest" bank account vs $26 with staking the same amount of money.

Now there's a whole different discussion that could be had about level of risk and interest fluctuations over time and things like that, and that's all viable discussion and something I have to keep in mind as well but it's really hard to look at these numbers and not want to leave the banks entirely and new phone who dis them when they inevitably reach out at 3am one day with the you up? text.

I started staking eth last year on Kraken. This is apy staking not apr. It began normally pretty flat in rewards. But i noticed the rewards are becoming smaller and smaller.

How is this possible? Shouldn't the staking be rewarding you more when you are getting more and more staked rewards? I am getting the rewards as a crypto, so they do not combine this with the staked assets.

Is this the cause of the rewards getting smaller and smaller? It says it gives 4-7%apy. Could it be that they started it on 7% and went down slowly towards the 4%?

Is it only me or are other people noticing this?

So I'm using CoinTracker and importing my transactions last year into TurboTax. After it imports my sales from last year, some of the transactions are being flagged and saying they require more information. It seems to exclusively be any transactions for received staking rewards that were sold.

So for example, I have a transaction for $0.03215050 XLM (a $0 value) listed as a sale, because I initially received it as a staking reward payout. Then, at some point months later I sold 100 XLM, so that virtually valueless staking payment I had received earlier in the year is listed as an individual sale counting toward the 100 XLM total. I basically have a couple dozen of these transactions, all tied to my sale of XLM. And it's weird because to me it seems like it would make more sense to just list the sale as one transaction with a cost basis averaged across all the staking rewards? So if I sold XLM and some of the amount was tied to staking rewards, just add up the average of those rather than actually listing every single one individually as a sale? But that's not how CoinTracker is doing it -- instead, it's showing them almost like lots in a stock sale, where any incoming amount (e.g. the staking reward payouts) is listed as a separate sale umbrellaed under that 100XLM total.

Anyway, TurboTax is asking me how I purchased/received these lots that were sold -- and gives me the option to choose "purchased it," "received it as a gift," or "something else."

I was wondering if you guys know which of the above categories a staking reward sale would fall under. I didn't technically purchase it, but it's also not technically a gift since it's a dividend payout linked to my holdings. It's not like someone just gave it to me for free, it was more like a reward payout. Does anyone know which of the above I should choose? Would "something else" be my safest bet?

Crypto noob here searching for enlightenment regarding crypto taxes.

I'm currently holding my cryptos on Binance and I've used the 'earn' option for a day or two, until I turned that option off and just let my portfolio stay as it is.

Now, the German Federal Central Tax Office states the following:

You won't pay tax on crypto gains:

• If you sell your crypto after owning it for 1 year or more.

• If the total profits from your crypto are less than 600€ per annum.

• If you sell crypto that was used in staking after 10 year of having bought it.

You'll only pay tax, as 'other income' on crypto gains:

• If you sell crypto in the same year you bought it and realise a profit over 600€.

• If you sell crypto used in staking which earnt interest AND you do so within 10 years from purchase.

• When you're mining, staking or otherwise earning an income from crypto.

If I understood it correctly, 'earning' is relatively the same as 'staking' on binance. Please correct me if I'm wrong.

I was planning to hold crypto for a couple of years before I sell it, but since I've used the 'earn' option on Binance in the past, does that mean that I have to wait 10 whole years until I can sell my crypto without paying taxes for it, despite the fact that I've used the 'earn' option only for a day or two in the past and don't use it at all anymore? Or does that mean that you can continuously use the 'earn' option for 10 years, before you can sell your earned crypto without paying taxes for it?

In other words- did I unintentionally f*ck up my plans?