Imagine your dog working every day to make money that flows into your bank account. While that sounds like a great idea, it's also a farfetched one.
However, there is a scenario that's at least somewhat similar that is a real opportunity. Just substitute "dog" with "dog-inspired meme coin." Here's the stunning amount of passive income you can make staking Shiba Inu (SHIB 3.89%) tokens.
This dog will hunt
We'll get to the monetary amount shortly. Let's first, though, address an important question: What exactly is staking?
The idea behind staking is that you can earn rewards by committing cryptocurrency tokens. Your tokens are then used to support the underlying blockchain as it verifies transactions. The catch is that the given blockchain must use the proof-of-stake consensus mechanism as opposed to the proof-of-work procotol.
At first inspection, you might think that the old expression "this dog won't hunt" might be true for Shiba Inu when it comes to staking. After all, the token is built on the Ethereum (ETH 2.26%) blockchain, which uses the proof-of-work protocol.
However, Ethereum is in the midst of a major upgrade to transition to a proof-of-stake consensus mechanism. Its Beacon chain is already in place, bringing the ability to stake to the Ethereum ecosystem. The plan is for the Beacon chain to be merged with the Ethereum mainnet sometime this year. When that happens, it will enable staking for the entire Ethereum network.
Digging up dollars
The bottom line is that, yes, you can stake Shiba Inu tokens. And you can make quite a bit of money doing so.
I surveyed three cryptocurrency exchanges that support staking Shiba Inu. Below are the current yields for each:
Maximum SHIB Staking Annualized Yield
Binance offers the highest annualized yield. The figure shown requires you to lock up your Shiba Inu tokens for 120 days. Binance also offers an alternative that only requires a 10-day locking period with an annualized yield of 10.12%.
Crypto.com appears to have the least attractive staking opportunity for Shiba Inu. You can currently receive an annualized yield of 3% in exchange for locking up your tokens for three months.
ShibaSwap's terms are the most complicated of the three exchanges. You must lock up 67% of your staked tokens for six months. However, the crypto exchange allows you to claim weekly rewards on the remaining 33%.
Exactly how much passive income you'll make staking Shiba Inu depends on which exchange you use, which lock-up period you choose, and how many tokens you stake. But it's currently possible to make more than $1,200 in annual passive income for every $10,000 worth of staked tokens. That's a much higher amount than you can find with most other methods of generating passive income.
Barking up the wrong tree?
While you can make an impressive amount of passive income staking Shiba Inu, it's not necessarily the best move. If the meme coin's price falls during the period your tokens are locked up, you won't be able to sell them. It's possible that your loss could far exceed your staking rewards.
Investors seeking to generate passive income by staking cryptocurrencies might want to instead consider stablecoins such as Tether (USDT 0.04%). The maximum annualized yield for staking the popular stablecoin currently available is 12.3%. Tether is much less volatile than Shiba Inu. Its price has barely moved up or down so far in 2022 while Shiba Inu is down more than 40% year to date.