Validity: Why stake?
In one of the biggest overhauls in crypto history Ethereum has completed a colossal software upgrade, merging with another decentralised ledger named the Beacon Chain. Whereas previously utilising the proof-of-work mechanism, this merge has resulted in Ethereum instead adopting the proof-of-stake transaction processing method, which is approximately 99.95% more energy efficient than their previous model (whilst proof-of-stake still uses work, it’s a lot less than proof-of-work).
Validity also operates using proof-of-stake, and the team have long known the advantages of staking so we are pleased to share some information to help you get started if this news has piqued your interest!
Why stake?
Rewards
Staking crypto is an excellent way to earn some passive income, especially during bear markets where you may choose to not trade as frequently. One of the main benefits of staking is that unlike crypto mining, you don’t need any expensive equipment to do it. In this respect not only is staking less expensive, it is also much more eco-friendly and energy efficient than mining, for example the entire Validity network runs on less than 2500 watts, the maximum equivalent of just 10 solar panels! This makes staking an accessible option for those who may not have the means or access to equipment to get involved in mining.
Staking is essentially an advanced form of ‘hodling’; so if you are storing VAL in the official wallet rather than on an exchange, staking is a great option to reap rewards for helping to secure the blockchain with the VAL coins you are holding.
Spread Fee Protocol
Validity is unique as it also utilises the Spread Fee Protocol (as far as we are aware, no other proof-of-stake blockchain has this feature). Unlike most blockchains where the transaction fees are included in the single block that contains the transaction, Validity spreads the fees over 1440 blocks. This helps to level the playing field and allow smaller stakes a better chance of receiving a share of the transaction fees.
Securing the blockchain
The Validity network grows and secures its blockchain via staking, using the proof-of-stake protocol for generating new blocks/coins, so staking is also a way of supporting the blockchain of a currency you’re invested in, helping to maintain its security and efficiency.
It’s easy!
When staking with Validity there is no minimum amount of coins required to do it, however very small balances may not generate a reward for months so this should be considered when you are deciding how much you want to invest. Staking with Validity requires a balance of VAL coins in an online wallet which must be kept open and unlocked; wallets that are closed or not connected to the network are unable to stake and generate new coins. The larger the balance, the more staking power the wallet has meaning that blocks will be generated more often. In return for this work of generating blocks, the wallet owner is rewarded with newly generated VAL coins, creating passive income. Your coins remain in your possession and you can choose to unstake to trade at any time.
Other coins may require a minimum staking amount and may even have minimum time periods that your coins must be held within the staking pool, so how much you want to stake and whether you want immediate access to your crypto will be factors in choosing what crypto you would like to stake with.
What if I don’t have much VAL?
Whilst staking on your own at home on your PC is easy and allows you to have complete control of your coins, if you have just a small amount of VAL you also have the option to join a staking pool. When staking in a pool with others, you are combining your staking power to increase your chances of successfully validating a new block. The more coins you have working, the greater the opportunity to generate rewards. Any rewards generated are then divided between the people in the pool. Joining a staking pool does involve trusting a 3rd party with your coins to allow them to stake on their client, therefore an element of control is relinquished in comparison to staking with your own Validity wallet.
Staking pools for Val exist on: www.mycointainer.com/ and https://btcpop.co/
Considerations
Staking can be a great way to earn rewards for helping secure the blockchain which is beneficial for your cryptocurrency holdings. As with all investments there are risks so before investing, make sure you have done your research on the coin your are looking to stake with and their terms for staking, for example whether they require you to lock up your coins in the staking pool, what their unstaking periods are and predicted performance of the coin overall.
The pros of staking with Validity:
- No expensive mining equipment needed
- Passive income generation
- Energy efficient, so no high energy bills
- Coins remain in your possession and you can unstake at any time
- Spread fee protocol
Want to start staking?
Visit the Validity website to download the wallet. You can also find our basic setup guide to help you get started.
To see how much passive income you could be earning with Validity, visit Reward Calculator.
