Proof of Stake (PoS) is a consensus mechanism used in the blockchain world that is quickly growing in popularity. Advantages when it comes to energy efficiency, barriers to entry and reduced risks of centralization are just a few reasons why projects are now more likely to employ PoS on their networks over the much more traditional method Proof of Work.
The staking market cap currently stands around $26.4billion, and the total amount currently locked into staking contracts stands around $11billion, a clear demonstration that PoS is not only growing in popularity but also in importance and impact on the crypto economy.
For crypto investors and speculators Proof of Stake holds value because of it’s perceived impact on price. Many speculators factor the consensus mechanism of a project into their analysis, the general perception is that if coins have been staked onto a network then there are less in circulation, which means a reduced supply to the market and many believe that would lead to increased demand and thus an increase in price, this is not always the case of course.
Proof of stake provides a way for token holders to make use of their tokens and earn some income. During the bull run of 2017, the crypto world saw more retail money than it ever had before, and many speculators purchased tokens in large amounts with the intention of becoming “Hodlers”, a long term trading strategy, but the 2017 bull run was followed by an intense Bear market, leaving hodlers to watch as their portfolios diminished in value. Staking gives hodlers a way to add value to their portfolios by earning staking rewards, so instead of having a large amount of crypto sitting in a wallet, they can now not only be participants in a blockchain network but also add value to their holdings at the same time.
A large number of exciting and key projects have adopted the PoS mechanism, Ethereum, EOS and our own project CUDOS all have staking mechanisms, to find out more about our staking mechanisms, visit our website www.cudos.org or check out our social media channels below.
