Staking is a process in which users store or lock (stake) several crypto assets to support operations and validate transactions in the Blockchain network in exchange for users getting rewards.
What is Staking?
Definition of Staking is the activity of pledging crypto assets into the Blockchain protocol. In staking, the coin holder (staker) will be rewarded in the form of the asset itself in return for the coins staked.
Staking has a process that varies depending on the coin and Blockchain network used. For example, on ethereum staking a staker must have at least 32 ETH to stake.
Staking Goals and Benefits
The main purpose of staking is to support the operation of the Blockchain network and validate transactions by maintaining and maintaining the Blockchain network.
In addition, staking aims to ensure that the Blockchain network remains stable, the consensus system can function effectively, and transactions can be properly verified.
Staking is a passive income and an alternative to mining (mining), which requires large computing power and electricity. Besides that staking also helps reduce coin inflation and increase the value of these coins in the market.
For those of you who want to make a profit, you can try staking crypto below.
How to Stake
Staking can be done according to the user’s needs and capabilities. The following are two examples of the most popular types of staking:
1. Single Staking
Single staking is suitable for stakers who want to earn rewards from staking results independently without joining a pool and assigning staking rights to other parties.
Stakers who do single staking only lock or store their coins in smart contracts on the Blockchain network.
Stakers will be rewarded for their contributions to supporting Blockchain operations through tokens or the crypto assets themselves.
An example of a single staking validator is Polkadot (DOT), a platform that uses a consensus system with several staking validators that users can choose from.
2. Staking Pool
Staking pools suit stakers who need more capital to do single staking.
Stakers perform staking pools by combining coins with other stakers to increase their chances of validating transactions.
Stakers will get rewards divided proportionally between stakers in the pool based on the number of coins staked.
An example of a staking pool validator is Ethereum. The new version of Ethereum 2.0 uses a Proof-of-Stake (PoS) consensus system.
Tips for Staking
Several things are important to know when choosing a validator. Please make sure the validator can be trusted, maintain the security of your assets, and develop them properly.
Here are some factors that can influence the validator:
1. Reputation and Track Record
You must choose a validator that has a good reputation and track record in staking to make it safe and efficient.
2. Staking Policy
Ensure you understand the validator’s staking policies, such as the percentage of return received, the minimum amount, and the staking period. Although not all stakes use a period, some continue until you decide to unstake.
3. Technical Capability
Choose a validator with reliable technical infrastructure and can ensure that the validator can process transactions efficiently.
4. Transparency
It would help if you looked for a validator that is transparent and willing to publish information about staking performance publicly.
5. Community Support
Look for validators who have strong support from the community and can provide support and assistance when needed.
Conclusion:
1. Staking is the process of users storing or locking several crypto assets to support operations and validate transactions in the Blockchain network.
2. The main purpose of staking is to support the operation of the Blockchain network.
3. When choosing a staking validator, make sure the validator can be trusted and can maintain asset security, and develop properly.
After understanding the staking terms above, you can immediately take advantage of the staking (Earn) feature at Indodax, because currently Indodax provides this feature under the name Indodax Earn.
In the following material, you will study and discuss basic learning materials regarding “Web 3.0”.