💻Staking!

What is Staking? The most detailed information about staking...

Staking is simply understood as locking cryptocurrencies to receive rewards.

In many cases you can accumulate your coins directly from e-wallets, such as Trust Wallet. Simply put, Staking is to lock cryptocurrencies to receive rewards. Currently, many exchanges also provide staking services for users to use. Binance exchange allows users to earn rewards in a pretty easy way and all you do is keep your coins on the exchange.

So, to better understand what Staking is, you first need to learn how PoS (Proof of Stake) mechanism works and how Staking works.

What is Proof of Stake (PoS)?

PoS is a Blockchain consensus mechanism that allows nodes to staking coins on the Block or in other words staking coins to confirm identity. Learn more about the origins of Proof of Stake.

If you know Bitcoin well then perhaps not far from Proof of Work (PoW) - this is the mechanism that allows transactions to be aggregated into blocks. These blocks are then linked together to form a blockchain, in other words, miners have to compete for the right to add the next block and blockchain.

PoW is proven to be a powerful mechanism to facilitate consensus reaching in a decentralized manner. PoW consists of a lot of random calculations and puzzles where miners are competing to find a solution. This is also why it makes sense to use so much computation to keep the network secure. However, many also question whether there is a way to maintain a decentralized consensus without spending a lot of money?

To answer the above question is the birth of Proof of Stake, the idea is that participants can lock coins for a specific period of time and will randomly assign permissions to one of the stakes. that person to confirm the next block. The probability of being selected is normally proportional to the number of coins because the more coins locked, the higher the chance of being selected.

This is exactly the same as improved PoW, and deciding which participants create blocks is not based on their ability to solve hash challenges. Instead, the outcome is decided based on the number of coins accumulated in it.

Some also point to the advantage of block generation via staking, which allows greater scalability for blockchains. This is also why the Ethereum network plans to move from PoW to PoS in a set of software upgrades collectively known as ETH 2.0.

Parameters to pay attention to when Staking

For effective staking to achieve high profits, it is necessary to pay attention to the following parameters.

CPI

Inflation occurs when the percentage of new coins born is larger or smaller than the amount of coins currently in circulation. In Staking, the PoS mechanism generates rewards for investors from two sources, the newly born blockchain and transaction fees. Therefore, the number of newly born coins will be invested in the market and inflation will occur.

Therefore, the rate of inflation directly affects the level of circulation and the price of the coin at that time. For coins with PoS mechanism, inflation rate often occurs.

Lock time

This time you can choose from the beginning because often projects will let you choose from the beginning depending on the participants. This is the time that the coin is locked and after this time you will get back the amount of coins you have staked.

For Nodes or Master Nodes, they usually determine the lock during the time of being a node when participating in Stake and during that time they receive a reward as a source of income.

Unlock time

Most people can press unlock after finishing the staking process but the amount of coins when participating in staking will be received back after a certain period of time. There are some projects that create rules so that the action of unstaking does not affect the normal operation of the network and also has a processing time if the amount of coins is too large.

Interest rate

During the Staking process, the interest rate is a parameter that all participants are interested in after a period of investment. The larger the profit, the larger the amount of coins received after Stake. Optimizing Staking is not simply concerned with high interest but also depends on other indicators.

Minimum amount of coins to participate in staking

Depending on each project, the minimum amount of coins required by a user when participating in staking is also different.

Coin age

This is the period of time when the coin starts to be profitable from the time of putting the coin on the stake to the time of participating in the official staking. However, depending on the nature of each project, this time may be early or late.

Weight

Weight includes coin age and the number of coins can simply be understood as the weight of the coin. The larger the amount of coins and the longer the time the coin participates in staking, the higher the Weight value and the greater the possibility of winning the right to process the transaction and create the next block. Weight directly affects the reward that the participant will receive in the future.