The decentralized finance sector of the crypto industry is one remarkable creation. This is because there are tokens that have an abundance of use cases. Traders are presently choosing not to follow most of the proof of work tokens, save for Bitcoin. In this regard, most of them now have their attention fixed on staking, a trend in the DeFi market. Staking is one primary method that traders in the DeFi sector have used to double their investments. In this article, we will be looking at how to stake AAVE and earn massive rewards.
What is Staking?
Staking is generally a way for users of the network to validate transactions on a proof of stake blockchain. It is also the same way miners earn rewards for validating transactions on a proof of work blockchain. To validate transactions and earn rewards, a user must have the minimum required balance. With this, he will be able to join the staking pool on the network. Users usually stake tokens by locking them in a wallet.
Staking usually has a set time limit where a user can choose to unstake his token. The higher the stake a user has in staking, the higher the right he has to validate transactions. Similar to mining, the main aim is to add new blocks to the blockchain. Asides from the rewards, users enjoy fast transactions and high scalability on a proof of stake blockchain.
How Does Staking Work?
To stake tokens, you need to have a set balance in your wallet. Note that the balance must be equal to or more than the minimum balance required. Like a traditional deposit of securities, the node stakes the tokens by adding them to the network. The amount that you stake will determine if you will be able to validate the next transactions. This means that a user is open to more rewards if he stakes more tokens.
Just as miners get rewards for successfully validating a transaction on proof of work, a staker earns rewards. Despite staking being one of the few ways to double investments, it has a downside. One most common risk while staking are attempts to double sign. This attack causes users to lose almost half of their stake. Another downside is the lock-up period, as traders need to watch them gain easy access to their funds.
How To Stake AAVE
The decentralized market is extensive, and there are a bunch of tokens that can be staked on different platforms. Users will need to conduct comprehensive research to determine the type of token they want to stake. The main factor that should determine the choice of token to stake is the potential reward. Also, users should carefully go through any terms and conditions to be on the safer side. In the few steps below, we will be looking at the few steps to carry out staking on AAVE.
Step 1: Send AAVE tokens to your wallet
The first step is purchasing the AAVE that you will stake. You can buy it on top crypto exchanges and send it to your wallet. You can also acquire AAVE by swapping another digital asset or fiat currency for the token. To communicate with the Aave platform, you will need a Web 3.0 wallet. This wallet will act as the bridge between your tokens and the platform. They can be either wallet extensions such as Metamask. You can also use physical wallets like Ledger. After sending your AAVE to your wallet, you can head to the Aave website.
Step 2: Connect your AAVE wallet to the Aave platform
In this stage, you will need to go to the top menu and click on the Stake tab. After clicking on the tab, you will need to click on the connect tab to connect your Web 3.0 wallet.
Step 3: Enter the amount and confirm
This is the last stage where you will input the AAVE tokens you want to lock up for staking. After inputting, you will need to click on the stake tab. A tab will pop up from your wallet asking you to confirm the movement of tokens. After confirmation of the transaction, you will click on the complete transaction tab to complete the steps.
How To Unstake on Aave
Unstaking your tokens is a slightly easier process compared to staking. To unstake your tokens, you will need to wait for a cooldown period. It is a tab above your APY, and you will be required to click on it to initiate your unstaking process. Once the cooldown period has elapsed, you will have a two-day period where you can unstake your tokens. To unstake, you should hit the claim tab just below the claimable AAVE tab. Notably, should you fail to claim your tokens during the period, you will be forced to wait another ten days to initiate another cooldown.
Aave is one of the most important players in the decentralized finance sector. The project is presently seeing a new burst of functions and features. This is one of the core factors behind the increase in the price of digital assets. Aave also has new features like flash loans and liquidity mining. The platform wants to create a clear financial system that is decentralized and works without the need for a third party. The developers of Aave are also working on certain new features. They want to make features such as lending and borrowing in the sector available to all parties. Aave is trading at $312, with a market cap of $4,138,220,994. There are about 13,222,539 AAVE tokens in circulation, and it has a fixed supply of 16,000,000 tokens.
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