How to Stake XRP?

Crypto holders engage with the digital finance area to make a profit and earn more money than they put in. There are multiple ways to do it, and one of them is staking.

So, if you want to know how to stake XRP coins, this article will give you the answer.

What is XRP?

Before we start considering the process of XRP staking, it is important to understand what XRP, XRP ledger and Ripple are. Sometimes, they are considered synonymous. Let's understand this together.

XRP ledger is a blockchain network used for global transactions. Any transfers and settlements on the ledger are made using its native cryptocurrency — XRP. Unlike other cryptocurrencies, XRP's transfers are almost instantaneous requiring no standard confirmation time. Ripple, in its turn, is the company that governs everything related to XRP and its ledger.

What is XRP staking?

Staking is a way to earn money with crypto where you lock a certain amount of coins in your wallet to support the network. In return, you receive a reward in the form of additional coins. Staking helps to ensure the security of the network and keep it running. But you can’t stake XRP.

XRP cannot be staked because, unlike the other cryptos, its parent blockchain relies on a unique consensus mechanism that does not require proof-of-stake (PoS). It verifies transactions through a network of servers, often owned by banks. Due to the XRP’s nature, validators don't have to stake their coins, they’re just selected randomly to participate in the consensus process.

Despite the fact that you can’t stake XRP in a traditional way, you can still earn interest by lending it. What does it mean and how to do it? Let’s explore together.

How to Stake XRP?

While traditional staking is not possible due to XRP ledger’s unique consensus mechanism, there are alternative ways. As we’ve already mentioned, you can earn passive income on your XRP tokens by lending on special platforms.

When lending, you essentially offer your XRP as a loan, and the platform then uses it for various financial purposes, such as providing liquidity or facilitating trades. In return, you receive interest on the amount you borrow. This method allows XRP holders to profit from their assets without having to sell or trade them.

Best Place to Stake XRP

Although XRP can’t be used directly due to the nature of its consensus mechanism, some centralized platforms like Nexo and Kraken offer the ability to earn rewards by lending out your XRP. Such cryptocurrency services provide liquidity using your XRP which borrowers access by providing collateral assets. In return you get rewards which is an annual percentage rate (APR) that borrowers pay to the token holders (i.e. lenders) who have added their XRP to the liquidity pools.

Benefits and Risks of XRP Staking

The main advantage of XRP lending is the ability to earn interest on your holdings. By lending out XRP, investors can generate a steady stream of passive income. It can be particularly attractive in a low-interest-rate environment.

Also interest earned from lending can provide a stable income stream which may help offset the volatility of XRP’s price. This can be particularly beneficial during periods of market uncertainty.

When making money with XRP, it’s important to choose a reliable platform. High rewards can be tempting, but they can also come with high risks as any other cryptocurrency management. Always choose platforms with a liquid market, and make sure you understand the risks. Lending XRP means you’re handing over custody of your assets to a third party, which brings with it counterparty risks and potential security issues.

Always be wary of platforms or services that make unrealistic promises. Check reviews, the platform’s regulatory status, and its security measures to ensure you’re safe to operate.

For your comfort, we’ve prepared a list of most often asked questions about staking XRP.

FAQ

Can you stake XRP on Coinbase?

No, you can’t stake XRP on Coinbase, because XRP is not a Proof-of-Stake type.

Can you stake XRP on Ledger?

No, you can’t stake XRP on Ledger, because XRP is not a Proof-of-Stake type.

Can you stake XRP on Binance?

No, you can’t stake XRP on Binance, because XRP is not a Proof-of-Stake type.