Everything you ever wanted to know about Proof of Stake, but were too afraid to ask
Even if you’re still new to the blockchain ecosystem, you’re bound to have come across at least a couple of people talking about staking. One of the most highly requested features within any crypto community, staking offers a passive rewards mechanism designed to give token holders a steady yield on their digital asset holdings.
Through staking, token holders, for example VRA holders, can deposit their tokens into a staking smart contract. This makes tokens temporarily unavailable for instant trading or transferring, however these tokens begin generating rewards for the user while still remaining in a user’s full possession.
But this simple concept is actually far more powerful — and rewarding — than many staking newbies realise. So here, we’re going to give you a short intro to why staking matters, and why it pays to stake (literally)!
How do staking rewards work?
Staking usually has a specific yield, or return, which is given as a percentage. Staking rewards are distributed according to your ‘stake’ — the portion of tokens you control or own, and deposit into the staking smart contract, relative to the total number of tokens staked.
In a highly simplified example, let’s say Alice and Bob both own VRA tokens. Let’s imagine there are 100 of such tokens in the staking smart contract. Alice stakes 10 VRA tokens, therefore her ‘stake’ is 10% of the total supply. Bob on the other hand stakes 1 token, therefore his stake is just 1% of the total supply. Both Alice and Bob take part in staking, which yields a 0.7% return, distributed pro-rata according to a user’s stake. Therefore Alice, with her 10 tokens, gets ten times as many staking rewards as Bob, despite the actual percentage return remaining stable.
Most often, staking rewards will accumulate in a user’s wallet and be added to their staking balance. This introduces a concept similar to compound interest in traditional markets, where accumulated tokens mean your stake is higher, and so you receive more tokens — incentivising long-term participation in the staking ecosystem. As a result, staking can become highly worthwhile if you’re planning to HODL your tokens for a long time anyway.
Why does staking matter?
Of course, the most obvious reason many users opt to stake is rewards. But by staking, you are also inadvertently contributing to the health of a blockchain ecosystem. Protocols which use staking usually implement it as part of their consensus mechanism — which determines the way that transactions are processed on the blockchain.
These blockchains are called ‘proof of stake’, often abbreviated as ‘PoS’, in contrast to ‘proof of work’ (PoW) cryptocurrencies which rely on mining, such as Bitcoin. Where PoW cryptocurrency protocols expend or ‘mine’ computing power to process blocks and transactions on the blockchain, PoS protocols leverage a user’s stake to give them weighted voting power and the ability to mint blocks.
There are multiple iterations of PoS, but all are generally more environmentally friendly than PoW consensus as they consume less electricity. Likewise, they can offer more opportunities for rewards to their users without the need for expensive mining hardware. So, what does staking look like in the Verasity ecosystem?
Staking in the Verasity ecosystem
In Verasity, staking is facilitated through our official wallet, VeraWallet. All you need to do is sign-up to VeraWallet, and follow these steps to get started. VeraWallet offers an instant buy and stake feature, which allows you to simply purchase VRA and stake it instantly — letting you quickly start earning rewards!
Currently, Verasity VRA token holders can earn VRA daily at 0.07%, or ~25.5% per year, through Verasity’s active staking campaign. There is a 2,500,000,000 reward capacity, and over 5.4 million available VRA capacity at the time of writing. So what are you waiting for, get staking today!
Still stuck on staking? Check out our handy Medium guide for a step-by-step guide to staking your VRA tokens!
About Verasity
Verasity.io is a protocol and product layer platform for esports and video entertainment. Verasity’s mission is to significantly increase engagement and monetization for video publishers on any video platform. Verasity products include: a proprietary ad stack and the VRA Rewards System integrated into SDKs for YouTube, Twitch, Vimeo and all major video platforms. Verasity’s patented Proof of View, a protocol layer technology offers transparency and immutability to defeat online ad fraud and NFT fraud.
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VRA can be staked for 25.55% annual interest at https://verawallet.tv.
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