Crypto Dividends: Staking Coins for Gains Potentially a Good Strategy in a Bear Market but Is Not Without Risk

Volatility coupled with one of the longest bear markets ever experienced by the cryptocurrency industry have compelled many investors to consider staking as a method of "Playing it safe," according to a Bloomberg article.

"Regardless of market conditions, staking provides returns denominated in the asset being staked. If you're going to be long, you might as well stake."

Different levels of PoS staking for different levels of rewardsIt is common in PoS cryptocurrencies to award those with a bigger vested interest in the network with bigger benefits.

Cryptocurrency networks will often offer different levels of staking - i.e., the more coins you lock away for staking, the bigger the network will reward you.

This gives rise to two distinguishable types of staking: masternode staking and non-node staking.

Masternode staking to validate transactionsMasternodes are network participants that are tasked with validating and authenticating transactions on a PoS blockchain.

Non-node staking to earn interest or dividendsNon-node staking is less complicated, and users are not involved in validating transactions.

Online, rewards and earnings for both masternode staking and non-node staking vary significantly between cryptocurrencies, anything from 0.7 percent to well over 1,000 percent.

The possibility of long-term gains has also given birth to a number of startups that focus specifically on providing staking services to investors, including Anchorage, Eon Staking Inc., Figment and Staked.

Perhaps as an indication of the strong market interest in the possibilities of cryptocurrency staking, on Jan. 31, 2019, Staked announced that they raised $4.5 million in seed investment from a number of institutional investors that included Pantera Capital, Coinbase Ventures and Winklevoss Capital, while Anchorage launched on Jan. 23, 2019 after a $17 million funding round led by venture fund Andreessen Horowitz.