Staking crypto can empower you to earn passive income. Yet with most crypto exchanges, you have to lock your coins while you stake them. What is a lock-up period when it comes to staking crypto?
It’s a length of time where your staked coins are held to secure and grow a specific network. You cannot do anything with coins while they are staked, and that includes trading or withdrawing. With lock-up periods, there is often a specific minimum period during which you will not be able to do anything with your coins.
Depending on the blockchain network and which coin you stake, the period can be from one week to a month or longer. Why are lock-up periods used in staking? In short, to increase demand.
By locking up tokens, they are withdrawn from the circulating supply and that means fewer tokens are available for trading. When there are fewer coins, demand increases, and the token's value will most likely rise in price. A rise in price for your token will result in greater returns.
So, on the one hand, a lock-up is negative because it freezes your tokens. On the other hand, the lock-up decreases the supply of the tokens, and it can have a positive result on the price. But lock-up periods are not only for staking.
There are also periods of unstaking with most crypto exchanges. When you decide to unstake coins, you may have to wait a period of seven days or longer before doing so. Once again, there’s more time involved before you can do anything with your coins.
Is there a way around that? Yes, there is. Although most exchanges have token lock-up periods during staking, CEX.
IO is different. We do not require you to lock up your funds. This is a major benefit that means you can trade your coins, or withdraw them anytime you want, even while the coins are still staked.
And you will receive all staking rewards until the moment you unstake your coins. Is there an unstaking period for coins on CEX. IO?
Nope. You can unstake your coins any time you want. Again, you will receive all the rewards that you collected during the staking process, up to the moment you unstake the coins.
Most crypto exchanges require lock-up periods for staking. But not CEX. IO.
You are entirely in charge of your coins during staking and can trade them or withdraw them at any time. Want to learn more about trading cryptocurrencies? Subscribe to our YouTube channel by clicking on the subscribe button below.
For more in-depth articles and guides, visit CEX. IO University. Link is in the description.
Thanks for watching, and may the markets trend in your favor!
