In PoS, users validate transactions and add new blocks to the blockchain by staking or holding onto their tokens. The two main types of staking are proof-of-stake (PoS) and delegated proof-of-stake (DPoS). Binance, for example, has a “Staking Rewards” program where you can earn rewards for holding certain supported coins/tokens on the exchange. The third way is to use a cryptocurrency exchange that supports staking. The advantage of this is that it allows you to earn rewards even if you do not have a large number of coins/tokens. In this case, you would deposit your coins/tokens into a pool, which would then stake on your behalf. For example, if you are holding NEO in the NEON wallet, then you are automatically staking. The first is to simply hold your coins/tokens in a wallet that supports staking. Here are the three main ways you can stake your favorite crypto. But in PoW, miners contribute their computational power to validate transactions, while in PoS, stakers simply need to hold their coins/tokens in a wallet. The process is very similar to that of mining in the Proof of Work (PoW) consensus mechanism. These deposited coins/tokens are then used to verify the transactions happening on the blockchain through a consensus mechanism known as the Proof of Stake (PoS).īy doing so, stakers can earn rewards in the form of new coins for their contribution to the network. And in return, they receive rewards for helping to keep the network secure. What actually happens is that the staker locks up their coins/tokens as a sort of collateral. What Is Crypto Staking?Ĭrypto staking is the process of holding cryptocurrency in a wallet to support the operations of a blockchain network.
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