So, I'm pretty new to the staking scene and have read the risks. I can't help the feeling like I'm missing something.. Has anyone ever had issues with loss of funds or anything else bizzare? It seems straight forward but with some of the return rates, I can't help being skeptical on staking as a whole. Please, share your personal bad or good experiences. All are welcome.
Posted by _MiserableAtBest_
5 Comments
My friend Hanna had something bizarre.
You’re taking tokens out of your custody and putting them into the control of a 3rd party, behind tooling that could break or be exploited, over a long period of time. Often locked, or vested, for extended durations of time, so you can’t remove the tokens. If there is an underlying token issue, crash, or the provider goes down, there’s nothing you can do.
So to answer your Q… All of those have happened to me. Luckily it wasn’t any life changing money, and by the provider ceasing to exist, their (wrapped) asset was basically worthless anyways (falling knife hit the floor).
Unless it’s a top tier exchange, or the assets don’t leave your wallet, staking is a significant risk.
Me personally am not a fan of staking. It creates a taxable event, unstaking can take up to 2 weeks or longer, and there’s the risk of slashing. Longterm, you can earn yield better than any bank but play it safe.
Depending on what are you going to stake? You might get more tokens of something that won’t hit ATH ever again so depends. Crypto needs a purge like 2000 did to tech companies. There won’t be more than 10 tokens that might have real usage, right now there is just one – Bitcoin..
Staking is considered income and subject to capital gains tax. Just a heads up