What does it mean to stake crypto assets?
Since blockchains are decentralized, they need a reliable mechanism to validate new transactions. One way of validating a new transaction is through the use of the Proof-of-Stake (PoS) mechanism.
The PoS mechanism allows investors to put their crypto in a staking pool to earn staking rewards from cryptocurrency protocols.
The investors start by committing their assets as collateral to the validator. The cryptocurrency protocol chooses one of these participants to confirm a new transaction.
If the transaction is validated successfully, the participant earns cryptocurrency as reward.
What kind of assets can be staked?
Any token whose network uses the PoS mechanism for validating its transactions can be staked. The returns you can make from staking depend on the Annual Percentage Yield (APY) set by each cryptocurrency protocol.
Check out the rates of some of the popular staking cryptocurrencies on Steakwallet ⬇️
What are the advantages of staking?
The staking model came about in response to the problems posed by another validating mechanism known as Proof-of-Work (PoW).
Many PoW cryptocurrencies (e.g. Bitcoin) receive criticism for wasting too much electricity and taking too long to validate transactions. The PoS mechanism uses less electricity and is also faster at validating transactions.
Because of these benefits, the PoS model is gaining more traction today. In fact, Ethereum, which has been using the PoW model, is moving its entire network to the PoS mechanism in June 2022!
Why should I stake my assets?
By staking your assets, you are helping to support the decentralized consensus mechanism of the blockchain.
Many investors also stake their assets because it is a passive way of earning returns.
Anyone can stake their PoS assets. Staking can be easy and simple with the right tools. One way is to start with Steakwallet, which allows you to stake within just 3 taps, making it dead simple for you to start earning today!
You can see staking guides to all the natively supported staking assets here.