Crypto Staking
What is Staking?
A way of earning rewards for holding a certain Cryptocurrency that uses a Proof of Stake (PoS) Consensus Mechanism.
For PoS networks, validators need to lock up and “stake” a certain amount of the currency and for a minimum amount of time as collateral, before they can be awarded the opportunity to validate transactions.
Staking adds security to the Blockchain as validators have “skin in the game” and therefore it is unattractive to act dishonestly when you can lose your staked currency. For helping the Blockchain operate safely, you receive rewards for doing so.
As different Blockchains have different minimum staking requirements, it is possible to join staking pools in order to meet the larger value staking amounts of certain chains.
Advantages of Staking your Tokens:
Generate passive rewards (a yield)
Yields are often higher than typical interest rates offered by banks
Contribute to the security and efficiency of the Blockchain
Risks of Staking your Tokens:
Often require a certain lock up period where you cannot transfer or sell your tokens
Price drops can sometimes outweigh reward yields during highly volatile times
May be longer waiting periods even after unstaking
Counterparty risk of staking pool operators such as hacks, going out of business, etc
You can learn more about different staking rewards and Blockchains with Staking here:
https://www.stakingrewards.com/
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