The Ultimate Guide to Staking in MyNearWallet
Some of you might have heard of staking as a way to earn passive income for holding crypto. But is it really so simple? What is the underlying concept of it? In this guide, we’ll overview all these questions and learn how to unlock the potential of staking with MyNearWallet.
What is staking?
Simply put, staking can be compared to a savings account. When you put money in a savings account, a bank uses it for lending to other people and pays you some percentage as a reward. Similarly to this, when you stake coins, you lock them in your wallet in order to stake to a Validator’s staking pool to validate block transactions. Typically, you earn rewards for the help.
What is Proof-of-Stake (PoS)?
There are three main mechanisms that help blockchain reach consensus: Proof-of-Work (POW), Proof-of-Stake (PoS) and Delegated Proof-of-Stake (DPoS).
Proof-of-Work mechanism is used in Bitcoin and is deeply linked to mining. Bitcoin transactions are gathered into blocks and linked together to form a blockchain. Miners compete in solving a complex mathematical problem and whoever solves the problem is granted with a reward and can add another block to the blockchain.
In Proof-of-Stake mechanism, the coins of the participants are locked (staked) and the protocol randomly chooses one of them to validate the block. In this case, the more coins are staked, the higher the probability to be chosen by the protocol is.
The Delegated Proof-of-Stake is similar to PoS, but in this case, your coins are considered as votes and you can vote for delegates that will ensure the security of a blockchain.The rewards are then spread among the delegates and they distribute them among the voters.
What are the benefits of staking?
- Rewards. It’s a way for you to earn interest on your crypto holdings
- Simplicity. You don’t need to have any profound skills or equipment. If you decide to try out NEAR staking, just follow the guide below.
- Ecosystem support. It’s a good chance for you to help the ecosystem maintain its scalability and become part of the community.
- Sustainability. PoS is more environmentally-friendly than PoW, with NEAR Procol having been awarded the Climate Neutral Product Label.
Things to consider when staking
Staking is a useful tool, however there are also factors that should be always taken into consideration before trying it:
- Market. Staking reward APY is deeply linked to the price of the coin you hold. Be mindful of the crypto volatility, DYOR.
- Validators. Choose your validators carefully. If your validator misbehaves, there is a chance you might lose your rewards or funds. There are also validators that take huge commissions.
- Theft. Pay attention to the security of your wallet: never share your seed phrase or private keys.
NEAR staking
Near Protocol uses PoS consensus to secure the blockchain and validate transactions, having a decentralized network of Validators, running the servers. The Validators get NEAR token rewards in the form of a static 4.5% inflation rate. NEAR holders can support Validators and contribute to the network by staking their tokens and earn their portion of rewards.
How to choose a Validator
When choosing a validator, there are several points to be taken into consideration:
- Choose more than one validator
- Choose an active validator
- Pay attention to the commission. Bear in mind that if a validator has zero fees, it’s pretty suspicious, because the process is quite complex and requires skill, time, and money. Also, a Validator is free to change the commission, so keep an eye on it.
Note: if a validator has 100% commission, you won’t receive any reward.
- Be aware of the most profitable options. It’s better to choose a trustworthy one
We highly recommend you do your own research. Check this official list of NEAR Validators.
How to stake NEAR in MyNearWallet?
Staking in MyNearWallet is very easy and secure. Please follow these simple steps:
1. On the wallet homepage click “Staking”.
2. Click “Stake My Tokens”.
3. Enter a known Validator or select a Validator from the list.
4. Click “Stake with Validator”.
5. Enter the amount of NEAR you’d like to stake.
6. Click “Submit stake”.
7. Click “Confirm”.
8. Congratulations! You’ve staked your tokens.
How to unstake tokens?
You can also easily unstake your tokens in MyNearWallet. Here’s how to do that:
- Go to “Staking”.
2. You will see your total amount staked right below the “Stake My Tokens” button.
3. Click the “Unstake” button near your total amount staked.
4. Select the Validator pool from which you wish to unstake your tokens.
5. Enter the number of tokens you would like to unstake.
6. Click “Unstake tokens”.
7. Check the information and click “Confirm”.
Conclusion
Staking is an innovative mechanism that ensures the security of a blockchain. It’s one of the ways that might let you get passive income for holding your assets. NEAR gives around 10% APY as a staking reward, according to StakingRewards.
If you’ve decided to join the NEAR PoS programme, MyNearWallet is the best place for you. DYOR and stay safe!
