Dangers of Staking on Exchange vs. Benefits of Staking on Avado

Staking is the process whereby crypto users actively get involved in transaction validation in a Proof of Stake (PoS) blockchain. Proof of stake blockchain is a concept that a person can have the chance to validate block transactions according to how many coins they have. This way, the amount of coins owned by a person determines to what extent they can receive rewards.

Staking can be done through different methods. One of the staking methods used by a majority of crypto investors is staking on exchange.

Exchange staking is where investors are given the opportunity to leave their PoS assets which can be staked in their trading account’s wallets to earn interest. In these situations, the exchange handles the technical part of staking, and the investors are charged a fee for this service.

Staking on exchanges is always associated with various challenges and dangers, yet a larger portion of crypto users opt for staking on exchanges. These dangers associated with staking on exchange range from theft and loss of coins, insecurity, and lastly centralization, to lack of voting rights.

Because of these challenges and dangers associated with staking on exchange, use of blockchain computers for staking is advisable. Avado is one the best blockchain computers which can be used for staking. It’s more effective for Ethereum 2.0 investors both in terms of cost and security. This article looks into the dangers of staking on exchange versus the benefits of staking on Avado.

Dangers of Staking on Exchange

Centralization and lack of voting rights

Using exchanges means handing over your voting privileges to them, which acts as another entity. This means that the exchange platform will be running a P-Rep on your behalf. In this case, these platforms will have the ability to utilize all your cryptos, Ethereum 2.0, that you have given them to vote themselves in. Many people might see this as no big deal. They don’t care whether the exchange is a P-Rep or not.

But in fact, this should worry many crypto investors as voting power is an essential thing in the blockchain network. This voting power is also directly related to the number of cryptos one invests. Staking on exchanges only raises their PoS stackable assets, which increases their voting rights.

The decisions in any blockchain network are always based on the 2/3 rule. This means that the party’s significant decisions are always carried out with higher representation, especially 67%. Staking through exchanges gives them 67% since they have invested many cryptos. This way, the exchanges are allowed to run the entire network. This particular situation gives the exchanges opportunities which can be termed as a monopoly. Because of this, the whole network will be majorly controlled by one party, thus the centralization.

It’s a specific thing that the exchanges are not and will never be willing to provide a future that will enable their users to vote for P-Reps.

Remember, the entire justification for providing staking rewards is to incentivize validators, those who have Ethereum 2.0, to elect P-Reps who they believe are the most qualified and willing to operate and grow the network. You might be asking: “Well, why do I care? I’m just in it for the free Ethereum 2.0!” Remember — the way to ensure strong P-Reps is to reward them with your vote while punishing weak P-Reps by allocating your vote elsewhere. However, if you choose not to vote, the inability to reward strong P-Reps and punish weak P-Reps is diluted. What are the consequences of that? They are:

  • An increased likelihood that a P-Rep is elected is technically incapable of running a consistent node, opening up the network to vulnerabilities, and reducing the willingness of enterprises to utilize it.
  • An increased likelihood that a P-Rep is elected does nothing to improve the growth and progress of the ecosystem, reducing the value of the network.
  • An increased likelihood of a P-Rep that acts maliciously toward the network in a manner that may directly sabotage it.

These are all bad things, and they would all have a significant negative impact on the network — and consequently the Ethereum 2.0 price.

Insecurity

Since its inception, cryptocurrency has faced many security challenges, including hacks such as the Allinvain hack, which took place in 2011and the Bitfinex in 2016. Cryptocurrency has been littered by exchanges who thought they had built solid and impenetrable security to lose their millions through hacks. The implication of this is that one can never be particular about how safe exchange is; even if they have credible and trustworthy infrastructure, the security of staking through different exchanges is not guaranteed, as these exchanges themselves suffer security breaches.

Loss or Theft

There is always the potential to lose your wallet’s private keys or that your funds are stolen if you don’t pay adequate attention to security. The theft is mainly associated with the use of third parties. In this case, staking on exchange is an introduction of a third party, to which security is not guaranteed. While staking on exchanges, one will have to share the private keys so that the exchange platform might do all the remaining work for you. Using personal staking devices or computers such as Avado will prevent such things from occurring, thus attracts more users. Moreover, it’s advisable to stake using devices where you hold the private keys instead of using custodial third-party staking platforms.

Any investor needs to be aware of the danger if one chooses to stake on exchanges. Alternatively, crypto investors can opt for taking at home with their own device, such as an AVADO. Avado allows you to stake various POS tokens through its plug-and-play device and DappStore.

Benefits of Staking on Avado

AVADO is pre-configured blockchain minicomputer that provides a plug and plays solution for the running of individual nodes. Avado is an infrastructure solution in cryptocurrency to run your blockchain staking node and earn interest with Ethereum 2.0. and other forms of cryptocurrency. Staking on Avado is associated with many benefits when compared to staking on exchanges. These benefits include; opportunity for the crypto investor to effectively run staking applications. Avado comes with a pre-installed Ethereum 2.0 setup. It is simple and easy to use for anyone.

Benefits of Staking on Avado

One of the significant benefits of AVADO for staking is that the crypto investor can efficiently run the staking applications. Usually, cryptocurrency involves the use of advanced technology. The staking is also carried out by use of technology through the use of different applications. These applications are the core of any staking activity. AVADO is helpful for crypto stakers, primarily those who are new in the field. AVADO provides the crypto investors with the necessary tech support which is required for staking to take place. The stakers do not need to know the ins and outs of technicality with staking, as each Avado device comes with pre-installed software. If you are a newbie in the cryptocurrency field, then the best way to start is using AVADO. You will be able to download Dapps on its DappStore and stake various cryptocurrencies on your Avado device.

AVADO nodes are suitable mini-computers that can be used effectively for Ethereum 2.0 staking. There are many reasons why this article suggests AVADO for Ethereum 2.0. The first reason is that Avado nodes come pre-installed and ready to go with Ethereum 2.0 set up. The second reason is that Avado provides a more accessible platform through which one can stake. All that is needed is to follow the documents provided by Avado then one is ready to start staking. Avado provides a conducive environment for crypto investors. Since they are new and fresh in cryptocurrency, they might lack the technological knowledge of how to go about the process of staking. The use of Avado helps the new users to acquire the necessary knowledge on staking.

The process of staking involves depositing Ethereum 2.0 into active validator software. Avado is the most reliable method which this software can use. A validator is a computer program used to check the validity or syntactical correctness of a fragment of code or document. Through staking, one is considered a validator themselves, which is associated with many benefits. Unlike staking on an exchange, the crypto investors will have an opportunity for storing data and keeping transactions. In staking on exchange, all these duties are left for the exchange platform. This way, for new users or crypto investors, the use of Avado will help them keep all the transactions and know the staking trend.

At last, when one stakes on exchanges, 15% of the reward is paid as a fee. When staking with Avado, crypto investors keep 100% of the reward. The amount can be significantly different over time when the crypto price increases.

Conclusion

With all the dangers and risks that come with staking on an exchange, it’s no wonder so many people are looking for another option. There is a better way to stake your Ethereum 2.0 coins than risking them in exchanges. You can choose Avado as your trusted partner when it comes to securing and staking ETH2 coins securely through our platform without any of the downsides of centralized platforms or risk being disenfranchised from voting rights because you don’t control those assets yourself! If you’re unsure how this process works or want more information before choosing where you’ll be staking your ETH 2.0 coin, we have experts waiting to chat with you today! You can join the Avado telegram group or find out more information on the website.

AVADO is a plug-and-play blockchain computer. Running a blockchain node on AVADO is the easiest way to participate in decentralized networks that reward you with crypto. ⛓️

You get access through its WiFi hotspot or VPN. 🌐💻
The user-friendly UI allows you to use and manage the device from anywhere in the world.🌎

It comes pre-installed with the AVADO OS, saving you a lot of time and research setting up a node.

Using an AVADO is convenient, secure and true to the spirit of decentralization. 🙌🏻

Get your AVADO at www.ava.do/shop or join our Telegram group https://t.me/joinchat/F_LlkBLEoDrFioPNviEpsQ

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