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What is Staking

Earning interest income on cash holdings or dividend income from stocks is considered one of the common ways to make passive income.

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What is Staking

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  1. What is Staking?

  2. Earning interest income on cash holdings or dividend income from stocks is considered one of the common ways to make passive income. What if there exists a possibility to generate interest income from crypto assets as well? • Yes, this is possible through Staking. • Put simply, Staking is a way to earn interest on your locked crypto holdings that will help validate transactions on their underlying networks. To understand it better, let’s learn the concept of ‘Proof of Work’ (PoW) and ‘Proof of Stake’ (PoS).

  3. What is Proof of Stake (PoS)?

  4. Consequently, an alternative consensus mechanism, Proof-of-Stake (PoS) emerged in 2011, which does not need miners and any mining hardware and software. • While the ultimate aim is to secure a consensus on the blockchain network, PoS is less energy intensive.

  5. General rules for staking • Although thestakin rules might vary on each network, the general conditions remain the same as follows: • The staker is required to only validate valid transactions on the network. • In exchange for approving valid transactions, the network rewards the staker with a reward. • If the staker approves illegal transactions, they stand a risk of losing their coins or stake.

  6. Conclusion Whilst staking seems very enticing as an alternative source of income, we need to be mindful of the fact that crypto currencies are highly volatile and entail risk. Since the coins are locked during the staking period, it is generally suitable for the investors with a long term view. At Fujn, we suggest adopting a cautious approach based on your risk appetite and perform a due diligence while indulging into any crypto investing and staking.

  7. PPT Created by fujn.us site CLICK HERE to learn more about site Fujn.us

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