How to Avoid Traps in Staking?

15 Nov 2023

As I wrote before, "Staking crypto is an appropriate way of earning passive income". As an average investor, it's one of the best options. In previous article, I made an introduction of Staking and I noticed that there were some comments concerning about the traps in staking, and they hoped to read more about this. In this article, let's discuss the traps in staking.

High interests rate rewards

Many projects or products announce that they have high interests rate rewards, if you put your assets there without any researching, you might be fooled. Anyway, at first you do get rewards by staking, but you can't ignore one thing, any products or projects involved staking have inflation rate. If the inflation rate is higher or the rewards can't cover the high increasing inflation rate, your assets will less value in the end. So what's the most important thing is, when you notice a product or a project which has a high interests rate rewards, you are suppposed to check its inflation rate, and make sure if the inflation rate is less than the interests rate.

I once saw a project/product with an unlimited inflation rate, although it has a high interests rate rewards by staking, and its APR(Annual Percentage Rate) is over 365%, which means the interest rate is more than 1% per day, I still insisted on not participating in this product. Finally, it is said that the project has gone, and it can be regarded as a scam. Fortunately, I didn't loss any money. Overall, when you see some ad words involved high interest rate, just be careful.

High commission fees

When you have involved in crypto staking, don't consider putting all your hopes on the node that you've selected. And ensuring that you should regularly check whether your node has privately increased the commission fees.

For example, when you put your assets in staking, the node's commission fee rate is 5%, after a couple days, they privately increase the commission fee rate up to 100%, that means you don't have any rewards by staking. Which is very common and very hateful. When you find the commission fee rate has changed, you can change the node, I suggest you guys choose those nodes with certain brand awareness.

Evil nodes

In many countrides and regions, crypto world is illegal, but which is not the reason or excuse for evilling. However, some nodes defraud investors of their assets, and this is relatively easier than traditional industries. As we all know, once you unstake your staked assets, you will not receive staking rewards immediately, it will take a period of time for the amount to be liquid.

I know some products' period of unfrozen time is 8-21 days in Cosmos ecosystem, and some products' period of unfrozen time is 14-28 days in Polkadot ecosystem. This setting also gives the evil nodes a certain amount of time. So be careful, and take care of your assets.

The capital background

Now that we probably meet evil nodes and scam, it's vital of importance to do research on the product or the project that we wanna select. Anyway, before engaging with staking, please focus on learning and researching the capital background of your target product. If it is a well-known project capital background, that means the cost of eviling is high. You can ensure what you've selected, and you can trust it. But if it's not, no matter how high the APR is, no matter how good a development plan they promise, no matter how clear a roadmap they have, do not trust them, do not take any chances, or you'll pay for the price, or you'll get punished.

If you wanna learn more about Staking, please feel free to read this article:
How to Earn More Coins by Staking?

Disclaimer: And as a final reminder, this is not financial advice and it's just for educational purpose only. Please do your own research and find what investments are best for you. Cheers everyone! For crypto world.

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I always lawyer of stacking in good reputable project because it has less risk and definite income.
Generally speaking, cryptocurrency staking offers returns that exceed those you can earn in a savings account. However, staking is not without risk. You'll earn rewards in crypto, a volatile asset that can decline in value. W should always think before doing anything.
let assets work for you even when you are sleeping. stacking is best option with low risk
Staking is awesome, but of course, one must also know how to choose the right assets for it to make sense and be profitable.
Oh, thanks for highlighting the fact. I did not know they could change the commission fee at will. I have to check out the ones that I have stacked over cosmos.