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  • Harsha M

Staking

Staking is an activity where a user locks funds in a cryptocurrency wallet to participate in maintaining the operations of a proof-of-stake (PoS)-based blockchain system. Staking helps a network achieve consensus while rewarding users who participate. The main idea is that participants can lock coins (their “stake”), and at particular intervals, the protocol randomly assigns the right to one of them to validate the next block.


Every time a block is validated new tokens of that currency is minted and distributed as staking rewards.


There are multiple POS (Proof of Stake) blockchains, ex - Cardano $ADA, $DOT, etc.


Delegated POS -> In some cases, people can use delegated staking because the probability of winning a block is higher in a node with more coins. Multiple exchanges (Kraken, OKcoin) and node providers offer delegated POS options so that the person with lesser coins can still earn the rewards. These node providers create a pool and take some percent of the staking rewards earned.



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