What is crypto staking? – Money Sense
You can buy proof-of-stake coins on a crypto trading platform like CoinSmart, which makes it easy to buy Canadian dollars. (Learn more about buying ether, cardano, and polkadot, three major coins you can stake.) Once you hold them, you can choose how much you want to stake on their PoS-based blockchain. By participating, you are helping to maintain the operations of a blockchain system, such as validating transactions.
Some projects have no or few staking thresholds – for example you can start staking cosmos with a minimum of 0.05 ATOM and cardano with a minimum of 1 ADA (minimums vary by staking platform) . Ethereum, however, requires a minimum of 32 ETH, worth around US$88,768 (as of February 1, 2022), unless you join a staking pool (see below).
What does a validator do?
By depositing crypto assets into staking, a holder becomes a validator, whose role is to approve valid transactions on the blockchain. (Learn more about the responsibilities of an Ethereum validator.)
At the very least, validators should have a high-end computer with plenty of storage capacity and a high-speed internet connection. They also need to install validation software and keep the system running 24/7. In exchange for this service to the grid, the staker receives additional tokens as a reward.
Once you’re set up, you don’t need to spend a lot of time dealing with staking-related tasks. “Users simply need to hold the token and activate validation software or use a staking service to help perform the activity,” Mosoff explains.
What is a staking pool?
Becoming a full validator brings the greatest rewards but also requires a substantial minimum investment. For this reason, going solo may not be a viable option for those new to crypto staking. Fortunately, there is an easier and cheaper way to participate: staking pools.
A staking pool allows a group of coin holders to combine their resources, usually through a staking service, to increase their chances of being rewarded. This consolidation, or pooling, allows them to improve their chances of validating blocks and receiving rewards. Compared to solo staking, however, a staking pool offers lower returns because each validation reward is split among the participants.
Staking pools are only available on blockchains that adopt the PoS model. They are usually operated by a pool operator or staking service, and participants must lock their coins into a specific blockchain address, or wallet, to participate. As a pool staker, you don’t need an expensive computer – the pool operator does the heavy lifting.