What is Staking?
Like a lot of things in crypto, staking can be a complicated idea or a simple one depending on how many levels of understanding you want to unlock. For a lot of traders and investors, knowing that staking is a way of earning rewards for holding certain cryptocurrencies is the key takeaway. But even if you’re just looking to earn some staking rewards, it’s useful to understand at least a little bit about how and why it works the way it does.
How does staking work?
If a cryptocurrency you own allows staking — current options include Ethereum, Tezos, Cosmos, Solana, and Cardano — you can “stake” some of your holdings and earn a percentage-rate reward over time.
The reason your crypto earns rewards while staked is because the blockchain puts it to work. Cryptocurrencies that allow staking use a “consensus mechanism” called Proof of Stake, which is the way they ensure that all transactions are verified and secured without a bank or payment processor in the middle. Your crypto, if you choose to stake it, becomes part of that process.
Why do only some cryptocurrencies have staking?
This is where it starts to get more technical. Bitcoin, for instance, doesn’t allow staking. To understand why, you need a little bit of background.
Cryptocurrencies are typically decentralized, meaning there is no central authority running the show. So how do all the computers in a decentralized network arrive at the correct answer without having it fed to them by a central authority like a bank or a credit-card company? They use a “consensus mechanism.”
- Many cryptocurrencies — including Bitcoin and Ethereum 1.0 — use a consensus mechanism called Proof of Work. Via Proof of Work, the network throws a huge amount of processing power at solving problems like validating transactions between strangers on opposite sides of the planet and making sure nobody is trying to spend the same money twice. Part of the process involves “miners” all over the world competing to be the first to solve a cryptographic puzzle. The winner earns the right to add the latest “block” of verified transactions onto the blockchain — and receives some crypto in return.
- For a relatively simple blockchain like Bitcoin’s (which functions a lot like a bank’s ledger, tracking incoming and outgoing transactions) Proof of Work is a scalable solution. But for something more complex like Ethereum — which has a huge variety of applications including the whole world of DeFi running on top of the blockchain — Proof of Work can cause bottlenecks when there’s too much activity. As a result transaction times can be longer and fees can be higher.
What are the advantages of staking?
Many long-term crypto holders look at staking as a way of making their assets work for them by generating rewards, rather than collecting dust in their crypto wallets.
Staking has the added benefit of contributing to the security and efficiency of the blockchain projects you support. By staking some of your funds, you make the blockchain more resistant to attacks and strengthen its ability to process transactions.
Which platform can you use for Staking?
Nexo is a lending and borrowing platform with a license in the United States. Nexo was established in 2018. Users can currently stake Stablecoin on the Nexo platform with up to 10% interest per year. Nexo is also known as one of the best platforms for Stablecoin Staking.
The happening between FTX and Binance makes investors lose their belief in exchanges. FTX lied to investors resulting to collapsed of FTX. However, unlike FTX, Nexo understands the problem of FTX and publishes all information.
- Investors can check Nexo’s license: https://nexo.io/licenses-and-registrations.
- Nexo’s Real-time-attest: https://real-time-attest.trustexplorer.io/nexo
- Investor’s insurance on Nexo: Total insurance of the Nexo Wallet has increased to $775 million through Nexo’s partnerships with BitGo, Ledger, Bakkt, Fireblocks, and other top-tier custodians whose facilities are protected via a syndicate of insurers in the Lloyd’s of London and Marsh and Arch.
- Attractive Stablecoins savings interest rate: The savings interest of Nexo in Stablecoins is similar to Binance, up to 10% per year, and the minimum is 8% flexible. However, investors only can deposit 2,000$ in Binance for flexible savings interest. But in Nexo, investors can deposit a maximum of 100,000$ for flexible savings interest.
Conclusion
Staking is the safest way for any investors in the Crypto space. Earn your money by staking. DCA your token with staking is the long-term strategy. You will feel lucky because of this thing in the future. If you worry about the risk of staking, you can also be Staking flex on Nexo.
All the above are What is Staking? If you have any questions for me, please comment below this post; I will write about them for you. And don’t forget to follow my Medium. I wish you success on your investment journey.
Read more: https://medium.com/coinmonks/how-to-optimize-stablecoin-with-nexo-1d8ffc976262
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