As an alternative to the proof-of-work method in blockchain mining where miners are in a speedy competition for whom can solve the screening math problem the fastest to earn the rights to validate the next blockchain transaction, proof-of-stake is promising to the rabbit and the hare alike. It is much more energy-efficient, and less risky than proof of work.
How to Think About Staking
A good way to understand the earnings in staking is to imagine it as similar to the earning process of a high-yielding savings account. The interest you’d earn is really a small portion of the bank’s interest-earning from the lending they’re capable of doing with your and others’ savings money.
Proof-of-Stake vs. Proof-of-Work
The proof-of-stake process is as follows: Rather than many miners over the world simultaneously running their powerful computers in competition for the same transaction in proof-of-work, one miner is selected and made to purchase and lock away some tokens as collateral. This incentive for efficiency and honesty in their validation discourages malicious intentions.
If mined correctly, staking rewards are given in new coin production and possibly a small percentage yield from transaction fees. These benefits are better for the pool participants and DIY miners alike and enlarge the chances for everyone to participate as they show themselves reliable validators.
Cryptocurrencies to Stake
Some cryptocurrencies that allow for staking are Ethereum, Cardano, Algo, Solana, Luna, Avalanche, Polkadot, and Tezos. From these options, rewards can range between 4-15% in percentage yield, which is much higher than any traditional bank savings accounts offer.
Risks and Rewards
Risks to consider in this are long collateral holding times of staked coins, and lengthy payout wait times to name a few. Nonetheless, this is a much more viable option for miners not involved in mining pools and who don’t possess the expensive hardware many proof-of-work miners must attain and maintain. If you’re interested in making crypto profit without trading coins, look into crypto staking!