User Guide to Staking

4 min readJul 26, 2022

What is Staking?

Participation in proof-of-stake systems is rewarded through staking. Network security is in line with personal incentives.

Cryptocurrency is secured by holders in a blockchain’s validator nodes. The ability to compile and process transactions into blockchain blocks is granted to successful validators. The native crypto coins of the blockchain serve as compensation for their work.

Tokens that have been staked are locked away and practically untouchable for a while. Depending on the network they are locked in, staked tokens can take a while to unlock. When staking, one should take into account the varying time it takes for staked tokens to become accessible.

The Case for Staking

The old proof-of-work consensus approach used by several networks, including Bitcoin, was intended to be replaced with staking. Since that time, DeFi blockchains have used it as their default model. The majority of staking’s advantages are shared by both methods, but choosing between staking and delegating isn’t too difficult because each was designed to appeal to a particular participant type.

Energy cost

Proof-of-stake uses substantially less energy than its predecessor. Running a proof-of-stake node only needs your internet-connected computer, and staking pools require even less equipment than complicated mining rigs and pricey GPUs.

Proof-of-stake supports a variety of use cases, such as sharding, that are incompatible with a proof-of-work approach in addition to resource efficiency.

Scalability

One of the most eagerly awaited features of ETH2 is sharding. Large “blocks” are divided into more manageable, speedier “blocks” in this type of database partitioning. These shards do away with the requirement that each node process the network’s total transaction load.

In contrast, proof-of-work requires each node to process each block as it grows. To increase the number of transactions per second, shards operate concurrently, needing less computation and storage per node. By using multiples of the number of shards each chain utilises, sharding enables the network to grow its transaction throughput.

Ease of Operation

Proof-of-stake networks still use nodes to reach agreement even when blocks are added in a different way than in proof-of-work networks. For newcomers, operating a blockchain node might be challenging, but proof-of-stake reduces this difficulty. You only need to run a single validator; you don’t need banks of mining nodes. To start making money, all you need is enough cryptocurrency and the suitable infrastructure partner.

Earn yield

Staking enables token holders to generate income on otherwise idle tokens. As a result, it is a well-liked investment strategy.

It’s typical to earn 6 percent to 12 percent APY throughout DeFi protocols, while a variety of circumstances can influence your predicted yield. This benefits assets with a limited supply as well as assets and fiat currencies with higher issuance rates and inflation.

Airdrop eligibility

Airdrops, sometimes known as “stakedrops,” are an entertaining and little-known benefit of staking. Tokens from new initiatives are frequently given away to chain validators. This means that early adopters of innovation are frequently stakeholder groups on well-known chains.

How to start staking?

Choosing which network to stake on is the first step in becoming a validator. Which assets and networks you think will prosper over the long run and which fit with your investment philosophy will determine your choice.

Once a decision has been made, a potential validator can set up a node, stake their tokens on the blockchain of their choice, and reap the rewards.

Delegating to a trusted validator

Delegating stake to a reputable validator simplifies the process for institutions or investors seeking scale as well as for users unfamiliar with the technical procedures and security standards of staking.

Using a liquid staking solution

A validator’s cryptocurrency is locked up by traditional staking in a smart contract with a chain-dependent delay in the unstake time. Different protocols and businesses have created liquid staking systems to guarantee validators can unstake and access their cryptocurrency freely.

Delegated validators can take on unstake wait times by using liquid staking, which gives users immediate access to money instead than making them wait. The advantages of yield farming and the flexibility of rapid fund access are both available to users in this fashion.

About SatoshiCity

SatoshiCity is a platform where users can buy, sell, rent, collect, and curate pieces of virtual land in the form of non-fungible tokens. Users will be able to upgrade their land on multiple levels by staking $CITY tokens. $CITY tokens are used as a native currency for the platform. This token will operate on the BSC Network and will be crucial in the core functions like the purchase of goods and services, staking for additional discounts, rewards distribution for liquidity providers, and Governance.

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