Staking is the process of locking a certain amount of tokens for a determined period to receive rewards. Users can lock tokens in their wallets or on blockchain nodes. The amount of rewards depends on the staking period and the amount of coins have been staked.
Staking is similar to depositing money into a savings account at a bank to earn interest.
In addition, staking also helps in reducing the circulating supply of a project’s tokens on the market. By staking on the blockchain network, users also contribute to strengthen the project’s security, development, decentralization and expand the project.
Types of Staking #
Staking to earn rewards on centralized exchanges #
Centralized exchanges often have a staking section for users. In this case, staking does not affect the blockchain network directly, but simply involves users locking a certain amount of tokens for a determined period to receive rewards. The rewards are paid directly by the exchange.
Staking using consensus mechanism Proof Of Stake #
Staking on the blockchain network carries more significance. By locking a certain amount of tokens on the network, users can participate in the transaction verification and block creation process, while also earning rewards in the form of transaction fees.
For example: By staking your $CSPR to OriginStake’s validator in the form of delegation, you are directly contributing to the network’s development and security. You can delegate to OriginStake through this link: go.originstake.com/casper
The Benefits of Staking #
For those who participate in Staking #
- Investors can earn passive income and increase the amount of coins they’re holding through staking instead of just leaving their tokens in wallets.
- Users do not need to spend too much cost to participate in staking.
- Investors can be more flexible in allocating their assets since they are able to calculate the expected profits as well as the unstake time.
For the project #
- Increase decentralization for the project as more people participate in the PoS consensus mechanism.
- Reduce the circulating supply of tokens outside the project, limit the impact of large sell-offs during market downturns.
- Enhance network security by distributing the power of nodes, which reduces the risk of 51% attacks.
With the information above, OriginStake hope you can have a general understanding of the Staking field. If you have any questions, please feel free to contact us via Live Chat Support on our website.