What is Staking
Crypto staking is the process of depositing your cryptocurrency assets into a pool to support the operation of a blockchain network and earn rewards in return. It's like putting your money in a fixed deposit account, but instead of a bank, you're lending your crypto to a blockchain network.
Why does staking exist:
The reason why staking exists is because of the Proof of Stake (PoS) blockchains, unlike the traditional "proof of work" (PoW) method used by Bitcoin, which relies on miners to solve complex math puzzles to validate transactions, PoS blockchains rely on validators to verify transactions.
How Proof of Stake Works:
- Validators: Validators are chosen based on the amount of cryptocurrency they have staked. The more crypto you stake, the higher your chances of being chosen as a validator.
- Transaction verification: Once chosen, validators are responsible for verifying transactions and adding them to the blockchain. This ensures the accuracy and security of the network.
- Rewards: For their work, validators are rewarded with cryptocurrency. The amount of rewards you earn depends on the amount you staked, the length of time you staked it for, and the specific blockchain you're using.
- Penality: If the Validator misbehaves and validates an incorrect transaction, part of the staked amount will be penalised. This disincentives bad behaviour.
Note: That is why its called “staking” because it provides skin in the game for validators
Who can Stake:
Depending on the blockchain staking can get very expensive and costly due to the infrastructure required to be a validator, and also minimum requirements to be a validator. For example ETH requires you to stake a minimum of 32ETH
That is why there are Liquid staking services such as Lido where you can lend your coins to participate in the rewards.
Top 10 Cryptocurrencies that can be staked:
Coin | Blockchain | Coin | How to Stake |
1 | Ethereum | ETH | |
2 | BNB | BNB | |
3 | Solana | SOL | |
4 | Cardarno | ADA | Staking for ADA needs a ADA wallet |
5 | Avalance | AVAX | The official supported method of staking is through wallet.avax.network |
6 | Polkadot | DOT | Stake through the official polkadot network |
7 | TRON | TRX | |
8 | Polygon | MATIX | Stake through polygon delegators |
9 | Internet Computer | ICP | |
10 | Toncoin | TON |
What is Xellar?
Xellar is the next generation non-custodial application, integrated into the DeFi world. Download Xellar on the App Store & Play Store. Integrate with Xellar’s cold wallet technology.
