DeutschStaking generally refers to a process in which one supports a crypto network by depositing coins. To do this, users can deposit their coin holdings in a wallet and thus generate a return. To clarify the concept, one should first know the terms Proof of Work and Proof of Stake:
1. Proof of Work
Proof of Work is a so-called trial-and-error method. Translated, this means something like proof of work. This mechanism is used to find an agreement in the respective network and to agree on an identical blockchain. The miners in the ecosystem must prove that they are providing a certain amount of work. The Proof of Work mechanism is applied through mining. The crypto miners use their computing power to solve mathematical puzzles. If they are successful, they receive Coin Rewards. Proof of Work is the basis of many networks. Many experts criticize the high energy consumption and the resulting electricity costs. In the Bitcoin network, approximately 66 percent of the total hash rate now comes from China.
2. Proof of Stake
In contrast to Proof of Work, Proof of Stake builds on a proof of stake. Experts see the advantage of higher energy efficiency in the Proof of Work mechanism. Blockchains that build on Proof of Stake do not validate blocks through mining, but through staking. The validators are selected according to the number of their shares and receive rewards. The following motto generally applies: The more coins, the more rewards.
Advantages of Proof of Stake
The advantages of the PoS mechanism are obvious. The user does not incur hardware and electricity costs. In addition, the PoS mechanism is environmentally friendly and enables greater scalability. A plus point that Ethereum has also recognized. The final switch from Proof of Work to Proof of Stake should be completed by “Ethereum 2.0”.
Is Staking Still Worth it?
There are several options for receiving rewards. Since the amount of shares is the primary factor here, many crypto owners form so-called staking pools. This is a community that pools its holdings in order to get more validations in the network. With this model, payments are made proportionally. These pools are ideal for meeting certain minimum requirements (coin holdings to participate in the program). Staking can still be a lucrative business model today, depending on the coin and price trend.
Staking Programs on Exchanges
More and more investors are using the uncomplicated offers from the leading exchanges. Staking programs are trending. This becomes particularly clear when you take a look at Binance. The following currencies are currently part of the Binance program:
- Stellar Inflation Rewards (estimated annual interest rate: 2% – 4%)
- Algorand Rewards (estimated annual interest rate: 12% – 14%)
- Elrond (estimated annual interest rate: 3% – 4%)
- ATOM (estimated annual interest rate: 8% – 10%)
- ONE (estimated annual interest rate: 8% – 10%)
- Stratis Staking Rewards (estimated annual interest rate: 1% – 2%)
- NEO (estimated annual interest rate: 1% – 3%)
- ai (estimated annual interest rate: 8% – 12%)
- QTUM Rewards (estimated annual interest rate: 6% – 8%)
- Komodo Rewards (estimated annual interest rate: 5% – 6%)
- TRON Rewards (estimated annual interest rate: 1% – 3%)
- Vechain Rewards (estimated annual interest rate: 3% – 5%)
- Ontology Rewards (estimated annual interest rate: 3% – 5%)
- Tezos Rewards (estimated annual interest rate: 5% – 7%)
Want to get started with cryptocurrencies and Bitcoin? No problem with the CoinPro.ch Shopping Guide.
More terms related to Bitcoin and other digital currencies in our A-Z list.
