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Sunday, July 3, 2022

How Much Money Can You Make as a Crypto Validator?

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Making an income online from the comfort of your home is a dream for many people, but it’s not easy to find such opportunities. However, crypto has now opened the door to token owners, allowing them to use their funds and computers to become validators or nodes on a blockchain.


Validating can certainly earn you an income, but is it worth the work? Well, let’s take a look into how much you can make by staking your crypto and becoming a validator.


What Is a Crypto Validator?


bitcoins and silver chain on desk

Before we get into the financial side of validating, let’s quickly go over what it involves. A blockchain that cryptocurrencies use consists of blocks filled with multiple transactions that have taken place within any given network. For a blockchain to remain reliable and secure, each transaction must be verified or validated, and new blocks need to be created.


This is where validators (or nodes) come in. These individuals stand as the backbone of blockchains and cryptocurrency in general. Validators operate via the proof of stake (or PoS) mechanism, which is now one of the most popular consensus mechanisms out there due to its efficiency.


Related: Proof of Stake vs. Delegated Proof of Stake: What’s the Difference?

To be a validator, you need to stake a certain amount of crypto for a chance of being randomly selected for the task. The minimum staking amounts differ depending on the coin in question, but this can vary massively.

Validators get paid in crypto for their work, which is why many people want to give it a go. But there are a few requirements you need to meet to have a chance of becoming a validator.

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What Do You Need to Be a Validator?


coins next to smartphone

Unlike cryptocurrency mining, you don’t need to go out and buy various pieces of new equipment to become a validator. But you need to have a considerable amount of spare storage space on your chosen validating device—around 250GB, to be precise—and an additional 8GB of RAM to get started.

Now, let’s talk funds. You can currently stake a wide range of different cryptocurrencies, be it as an independent validator or in a pool, and with varying coins come varying minimum staking requirements. These can range from tens of thousands of dollars to almost nothing.

Take Ethereum, for example. This is a top-rated coin to stake, but getting your foot in the door is very difficult. This is because of the 32 ETH rule, which states that no one can become an independent Ethereum validator unless they stake a minimum of 32 ETH.

Related: Can You Stake Cryptocurrency On a Raspberry Pi to Generate Passive Income?

Currently, this amounts to almost $90,000 but has exceeded $100,000 in the past. You should also have an additional 1 ETH to be able to pay Ethereum gas fees, too. Either way, most people simply cannot afford to stake such a high amount.

But this isn’t the case with all cryptos. You can become a validator on other blockchains for a fraction of this, as long as you have sufficient storage and RAM.

You may also struggle as a crypto validator if your technical knowledge is lacking. So, make sure you’re familiar with how crypto, and therefore blockchains, actually work before jumping in. You don’t need to be a tech expert, but understanding what it means to stake, how it is done, and the risks involved is a pretty integral part of the process as a whole.

Now, we know what staking or validating is and what is required. So, let’s get to the big question: is being a validator really worth it?

How Much Can You Earn as a Validator?


woman holding dollar bills

It’s important to note above all else that the amount of money you can earn by validating will depend on the initial amount of crypto you decide to stake. Because validators usually have to lock up their staked funds, it’s tempting to stake as little as possible. But this will, in turn, affect how much you can earn, as your staking rewards are calculated as a percentage of your staked funds.

It is also important to note that the reward rates for validators vary depending on the price of the coin they’ve staked. Crypto coin prices are constantly changing, and therefore, it’s crucial to keep in mind that a considerable drop or crash could result in you losing out in the staking process. Furthermore, as more and more validators join any given network, the available rewards per validator will also decrease.

Let’s jump back to Ethereum staking to understand this further. The current average reward rate for staking Ethereum across major exchanges is around 6%, but this rate varies considerably depending on which platform you choose.

Related: What Is a Staking Pool and Can You Earn With One?

For example, if you wanted to stake Ethereum as an independent validator using Bitfinex, you can currently earn $755 monthly or $8,948 annually. While this is by no means an amount you could live off of, it would certainly add a nice bonus to your regular yearly salary. But what happens if you’re not staking massive amounts? Are the rewards still worth it?

It’s important to note that staking 32 ETH will naturally bring in much higher rewards, as the original staked amount is itself substantial. So, let’s say you have a decent amount invested in Cosmos and want to stake 100 ATOM (which currently amounts to just under $3,000). Unfortunately, this wouldn’t land you much more than $55 annually.

The same goes for the majority of other altcoins. Aside from a handful of tokens like Ethereum and Binance Coin, most cryptos just aren’t worth an awful lot, and you can’t earn big bucks by staking them.

On top of this, fees charged by the network you validate with can also bring down your overall profits. Also, since you often cannot access your staked funds for the duration of the staking period, you won’t be able to sell them if there is a price hike or invest them in other, more lucrative opportunities.

It’s important to remember that staking, and therefore being a validator, is a passive activity, unlike a traditional job. Because of this, you can’t expect the same kind of money in return. However, if you want a little extra income for the small things, or you’re willing to stake a large amount, then it isn’t a bad idea by any means.

Staking Crypto Is Easy, but Not Always Lucrative

Like most passive income methods, crypto staking won’t make you a millionaire. However, this doesn’t mean that it is a pointless venture altogether.

If you have a large pot of crypto that’s just sitting around, staking can be a great way to make some extra cash effortlessly. Just be aware of the downsides and possible risks, and you can rest easy knowing your crypto is earning interest on your behalf.




crypto coins in between waves
Liquid Staking: A Better Way to Earn With Your Crypto

If you’re after the best of both worlds, take a look at liquid staking and the benefits it can offer you.

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