Stay with us in this article because we are going to talk about staking. Staking is a way to make passive salary. Passive salary is the income that you earn every day without doing anything, simply because your money does the work for you.
Investment in the stock is a great way to earn passive salary and staking can make this goal happen. Stay with us until the end of the article to talk more about this issue.
What is Staking?
First, let's examine what staking is and what operation it is called. Staking means that you keep your money in another platform's wallet. By this decision, you will do 2 works at the same time:
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You will make powerful the system of Investment in the stock
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And you will get profit from your money
The steak can be done directly. That means, you are able to connect directly to a platform and make an investment without any special intermediary.
Staking can be a passive salary for you. Not in all crypto currencies can be staked. Only certain platforms with specific crypto currencies have this Possibility.
How does Staking work?
Staking works similar to depositing cash. In fact, this is a method of saving with high returns. This is what happens in banks. Actually banks lend your money and spend them on profitable activities. In the end, you only get a little profit. But Staking is different.
Because it doesn’t work with people. The system of staking is work with POW and PoS algorithm. So, in this system, there is no need for heavy hardware and mining system to produce a situation for making more money.
Validators of POW algorithm, will selected by the amount of coins they have staked. In this situation, to maintain the security of the network, the validator locks its capital in the platform and waits until the capital locking period ends. During this period, he receives interest on his deposit.
What is the relation between POW mechanism and Staking?
Before explaining POS, we need to mention some information about proof of work (POW). For having an example, remember bit coin. Because the first block chain that used POW system to secure the network, confirm payments and generate new tokens, was bit coin. You should know that the cost of proof of work (POW) was very high. For this reason, people created a new solution called POS.
In this method, users lock their money in it and the protocol will randomly confirm which of the clients can confirm the next block. The selection of a customer is not random and depends on the amount of tokens he has staked. People who have staked more tokens, will have more chances to confirm the next block.
Introduction to conditions of staking
The block chain where the staking operation is going to start must use the proof-of-stake algorithm. This platform itself must have other special conditions. The wallet in this system must be online all the time. The wallet itself must be able to support staking.
Money needs to be locked up for at least a week to receive the deposit bonus. All stake platforms have a money lock system. The longer your money is locked in the platform, more profit you will earn. Some platforms also support money lock for up to 5 years. A minimum condition is usually defined for investing in such platforms.
How is the staking bonus calculated?
How is the staking bonus calculated? This is a question that people usually ask. We cannot think of a short answer to this question.
If you look at the Cryptocurrency market prices, you will notice that different assets have different values. In staking, their value is sometimes not a criterion at all, and it does not mean that a token with a higher value gives a higher profit.
Usually, native tokens have the highest reward, and the reward of other tokens is also paid through native tokens of the platform. Things like the number of coins staked, the number of people participating in the staking process, the inflation rate and the set of stakes in the network will determine the final reward.
What does staking pool means?
One of the main concepts in the staking process is its pool. Whenever a group of investors commit their assets to the platform for a chance to be approved, they form a pool together.
For example imagine an Iranian cryptocurrency staking website where a large number of investors are engaged in staking. In this situation they all actually built a pool.
It should be said that among all of them, a person is selected by the platform for approval, and this depends on the amount of that person's investment.
Introduction to staking advantages
There are many people who have chosen steak as a practical method and use it a lot. Through special platforms, they can create passive salary for themselves and get help from this money very easily. To earn money in this way, you don't need to trade and learn complex concepts of the market.
Also, you don't need to always check the market to see how different crypto currencies have grown. You don't need to buy expensive equipment and this method of mining doesn’t earn any money for itself.
For this reason, it doesn't harm your money and consumes less energy. In other words, working with these platforms is very simple and anyone can quickly learn to work with them.
Conclusion
Staking can be a good passive salary for people. Of course it depend on which platform people use. In this method, you, as an investor, are able to lock your money in a certain platform for a certain period of time.
The security of the network of that platform is provided through your property, and the confirmation of transactions will be random by the people who participated in providing the network.
Like mining, this participation is not fruitless for them and finally the platform will reward them for the deposit they have made.
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