Why staking is in trouble sort of

xuanling11
Coinmonks
Published in
2 min readFeb 11, 2023

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Photo by Afif Ramdhasuma on Unsplash

Crypto staking is one of the consensus called Proof of Stake.

It is a way to reward workers from consensus to contribute power to support the ecosystem.

However, the SEC just fined Crypto exchange Kraken of their staking services.

Why SEC did it?

There is a misconception about yield and staking in the crypto exchange.

Because there is no way users know how the crypto exchange operates, those services can have a mix of yield and staking together but only give a rewarding result.

Yield is a crypto lending that bankrupts many crypto companies, including FTX. They are highly leveraged of what they did not have to attract investments from everywhere and hope to return their investors with rewards so they can keep the money.

Staking is what blockchain operation requires and a way to reward blockchain workers through their contribution.

Similarly, staking is also hoping users keep their money in the pool as long as possible.

But staking has not leveraged assets to possibly make the investment disappear.

Such investment lost usually occur from yield products due to their highly risky bet and highly returns of investment they promised at the first place.

And yield product is not hedge funds either because their investment portfolios are mixed with many god-known “promise” investments.

That is why yield is no no but staking is okay.

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