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What is Staking | Decision making and rewards
What is Staking?
Staking, in the context of cryptocurrencies, refers to the process of participating in the validation and verification of transactions on a blockchain network. It is commonly associated with proof-of-stake (PoS) and delegated proof-of-stake (DPoS) blockchain protocols. Unlike proof-of-work (PoW) systems, where miners compete to solve complex mathematical puzzles to add blocks to the blockchain, staking relies on validators or "stakers" who lock up a certain amount of cryptocurrency as collateral to support network operations.
Some types of staking you should know
Now that you know what staking is and how it works, we should mention that there are different types of staking, which we will summarize below:
Cold Staking
It is not often not required to be connected to the internet for staking cryptocurrencies. Many people use cryptocurrency wallet cold or cold, hardware that does not have a permanent internet connection.
Some blockchains have cryptocurrency staking that allows you to trade cryptocurrencies regardless of whether you have your funds offline, but you can still participate in network decisions.
Staking groups or collaborative staking
With very large cryptocurrencies or with many users, it is difficult to make important decisions due to the large number of participants (everything is done democratically). For this reason, the communities of certain coins unite to be elected as block validators.
This means that they pool their funds, actively participate in the decisions and share the rewards generated by this process. This allows new users to participate and learn all about staking, and older users to make better decisions.
Staking Providers
There are companies that provide staking by simply having coins stored there. A very easy example is TruBit, which with its Earn+ program will pay you an annual interest percentage depending on the cryptocurrency you choose to invest.
In the case of TruBit, the Earn+ program allows you to earn extra income in currencies such as NARs, MMXN, USDT, ETH and BTC. You can also choose the terms and durations, so we could say that it works as a program to earn interest in cryptocurrencies.
How Does Staking Work?
To understand how staking works, let's break it down into simple steps:
- Acquire the Cryptocurrency: To participate in staking, you need to acquire the specific cryptocurrency associated with the blockchain you want to stake in. For example, if you want to stake in the Ethereum 2.0 network, you'll need Ether (ETH).
- Choose a Staking Platform: Many cryptocurrency exchanges and platforms offer staking services. You'll need to select a platform that supports staking for your chosen cryptocurrency.
- Lock Up Your Coins: Once you have your cryptocurrency on the chosen platform, you'll need to lock up a certain amount of coins as collateral. This amount varies depending on the network and the staking requirements.
- Participate in Network Consensus: By staking your coins, you become an active participant in the network's consensus mechanism. Your role is to validate transactions and secure blockchain.
- Earn Rewards: In return for your participation and the security you provide to the network, you receive rewards in the form of additional cryptocurrency tokens. These rewards are often paid out periodically.
The Benefits of Crypto Staking
Now that you understand the basics of staking, let's delve into the benefits of crypto staking:
- Passive Income: Staking allows cryptocurrency holders to earn a passive income by simply holding and staking their assets. This is an attractive option for those looking to grow their cryptocurrency holdings without actively trading.
- Network Security: Staking plays a vital role in the security and decentralization of blockchain networks. Validators have a vested interest in maintaining the integrity of the network since they stand to lose their staked assets if they act maliciously.
- Energy Efficiency: Unlike PoW, which requires significant computational power and energy consumption, PoS and DPoS are more energy-efficient. Staking reduces the environmental impact of blockchain networks.
- Liquidity: In many cases, staked assets can be unstaked or withdrawn relatively quickly, providing liquidity to investors who might need access to their funds.
Conclusions
Staking is one of the most common activities within the cryptocurrency world. It allows you to gain participation, ensure the security and transparency of the blockchain and, of course, earn tokens and rewards for your participation.
If you don't have much knowledge about where to do staking, TruBit is a safe and reliable platform that allows you to perform this activity quickly. By having programs like Gana+, you will receive the rewards for your participation gradually, with the possibility of choosing your APY and the time of participation.
