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Staking your crypto assets is an exciting way to earn passive income. Through the Proof-of-Stake (PoS) mechanism, you lock up your coins to support the network's security, and in return, you earn rewards.
But the excitement of earning passive income shouldn’t overshadow the importance of security. In crypto, security is paramount. With assets stored in the digital world, they're vulnerable to a host of cyber threats.
Self-custody is crucial in ensuring that you're the only one in control of your private keys and crypto assets. When you stake crypto, especially for long periods, the risks associated with poor key management become even more evident.
You must have a robust strategy to protect your assets. That’s where hardware wallets like Cypherock X1 come into play, offering secure key management while you stake your tokens.
While staking offers lucrative rewards, the risks involved can outweigh the rewards if you aren’t careful. Let’s break down some of the primary risks associated with staking crypto:
The crypto space is rife with potential online threats. Exchange hacks, phishing attacks, and malware are constant dangers. If you're staking via exchanges or using hot wallets, you're opening the door to these vulnerabilities.
Most hacks target centralized exchanges (CEX) where many funds are stored. If you’re staking through such platforms, you’re entrusting your assets to a third-party service that can become a target.
The seed phrase is your private key. If someone gains access to it, they can take control of your assets. Poor storage practices, like saving your seed phrase digitally or sharing it online, can expose you to theft. A compromised seed phrase is often the reason many people lose their crypto.
Using centralized exchanges for staking means you're giving up control of your keys. Many CEXs have been subject to hacks, and there’s always the risk of service shutdowns. If you stake your crypto on these platforms, you're at their mercy, and you could lose your funds if they get hacked or go out of business.
Now, this is where non-custodial wallets come into play. These wallets provide you with control over your private keys, ensuring your assets remain safe from online threats, seed phrase risks, and custodial risks.
When choosing a wallet for staking, you need to decide between hot and cold wallets. Let’s go over the differences:
Hot wallets are software-based wallets that remain connected to the internet, offering ease of access. However, because they are online, they are vulnerable to attacks like phishing, malware, and hacks.
They may be convenient for smaller amounts or quick transactions, but they are not ideal for staking large amounts of crypto due to the security risks involved.
Cold wallets are hardware wallets that store your private keys offline, offering a significantly higher level of security. By keeping your keys offline, these wallets are immune to online attacks.
Cypherock X1, for example, offers decentralized key management and multiple layers of protection that go beyond traditional hardware wallets. If you're serious about staking, a cold wallet is a must-have.
DeFi-ready wallets integrate with decentralized applications (dApps) allowing you to stake your crypto without exposing your private keys. Wallets like Cypherock X1 support multiple blockchains and dApps, offering secure access without compromising on user-friendliness.
Staking securely with a hardware wallet is the safest choice because of the following features:
Hardware wallets keep your private keys offline, which makes it difficult for hackers to access them. Every time you stake or make a transaction, you must approve it physically using the device. This protects you from online threats like malware and keyloggers.
Because hardware wallets are offline, they cannot be infected by malware that typically targets online wallets or computers. With physical hardware, your keys are much safer than they would be stored on a device connected to the internet.
Most hardware wallets, including Cypherock X1, use secure elements (SE) to store cryptographic keys. These SEs are tamper-resistant chips that provide high levels of protection.
Additionally, open-source code and third-party audits ensure that the wallet’s security features are transparent and have been tested for vulnerabilities.
Cypherock X1 offers unique features that make it an excellent choice for staking securely:
Cypherock X1 uses Shamir Secret Sharing to break up your key into multiple pieces, ensuring no single point of failure. Even if one piece is lost or stolen, your keys remain safe, offering added protection compared to traditional methods.
Unlike most hardware wallets, Cypherock X1 doesn’t require a manual seed phrase backup for recovery. This reduces the risk of social engineering attacks and seed phrase theft.
Cypherock X1 supports multiple chains and wallets (up to four wallets), including Ethereum (ETH), Solana (SOL), and Polygon (MATIC), making it ideal for managing and staking multiple tokens.
Cypherock X1 integrates with WalletConnect, allowing you to securely interact with decentralized applications (dApps) for staking without exposing your private keys.
With Cypherock X1, you can stake your assets while keeping your keys stored cold. This offers the security of offline key storage while allowing you to participate in staking and DeFi without compromising security.
The CySync app provides a unified dashboard that helps you manage your portfolio, track staking rewards, make swaps, and interact with dApps in one place.
CySync makes managing your staked assets easy with several built-in features:
With Cypherock X1, you can use WalletConnect to stake your assets securely across various decentralized platforms.
CySync allows you to buy crypto with fiat currency and swap tokens directly within the app, making it easier than ever to stake and manage your crypto assets.
CySync tracks your portfolio’s value in real-time and allows you to set up inheritance configurations, ensuring your crypto assets are passed down securely in the event of an emergency.
To safely stake crypto and earn rewards, it’s important to prioritize security. Using a non-custodial, audited hardware wallet like Cypherock X1 ensures your private keys are secure and that you're in control of your assets.
With decentralized key management, cold-stored keys, and seamless integration with dApps, Cypherock X1 provides everything you need to stake confidently and securely.
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