What is staking?
Staking is one of the ways to passively earn income from cryptocurrency, based on the PoS algorithm. The process of staking tokens is similar to a bank deposit at a certain percentage. Staking cryptocurrency has been one of the surest ways to generate yield on your crypto asset. Most staking pools in the crypto space give you a better return than incumbent TradFi systems, and why should you keep buying tokens when you can earn passive income on the assets you already own? https://redot.com/staking/ is a reliable platform for staking with minimum investment and no fees.
Key points about staking
Cryptocurrency staking is the storage of tokens on a cryptocurrency wallet or exchange to ensure the operation of the blockchain. Validators are rewarded for securing transactions on the blockchain.
Staking is common in networks using the Proof of Stake (PoS) algorithm. PoS is an alternative to Proof of Work (PoW). PoW blockchains use mining to verify and validate new blocks. This is a laborious and costly process.
PoS chains create new blocks in the network by staking cryptocurrencies. The process of mining new blocks in such networks is called forging. Anyone can become a validator. To do this, the user just needs to buy a cryptocurrency and “stake” it on any centralized (CeFi) or decentralized (DeFi) platform. PoS validators are selected based on the number of coins in the system - in the stake. The more tokens a user invests in a stake, the more likely they are to become a validator.
The formation of blocks using the PoS algorithm allows you to increase the scalability of the blockchain network. Related to this is the transition of the Ethereum network from PoW to PoS.
Users who have locked their tokens (holders) can unite and form a staking pool. Participation in the pool increases the likelihood of being selected as a validator.
As a rule, participation in a staking pool takes place if the blockchain network has a high threshold for entry - technical or financial. Most pools require complex setup and maintenance. Therefore, pool providers take a percentage of the remuneration.