Staking is the act of setting up an aggregation of tokens/coins as a security measure and right to approve transactions in a PoS work mechanism. Amount of coin and time of staking both give more staking power to the holder.
So a person with high balance has more staking power than a low balance one, but that’s not fully true as staking is also dependent on time, a low balance but much old stake might have high staking power than a new high balance stake/node/hub.
Hub that verifies transactions accurately is compensated with rewards while those that do some mistakes in following norms are penalized and have their stakes lightened, causing loss of some coin for light mistakes or their whole stake for huge faults. The more a hub stakes, the more probable it is to be chosen to approve any transaction because of the fact that they have more to lose from defying the guidelines and are hence supposed not to do such.
In this era of digital/crypto money there are many new revenue streams now. One of the most straightforward approaches to benefit in the crypto space is through staking. So what precisely is staking? Staking stands for holding digital money in your wallet for a definite period. The reward that one wins from staking depends upon the length of the time that they hold it. The more extended the stake length, the higher the profits.
Staking is existent in multiple Altcoins which uses POS mechanism to verify transactions.
How does the PoS Work?
In Proof of Stake mechanism, Approver is picked arbitrarily from a pool of holders of the crypto coin. A Staker can be added to the pool by staking a specific number of coins in a staked wallet. The node stakes the coins in the staked wallet and makes a new block that is proportional to the level of coins staked.
Benefits of staking
One of the benefits of staking is that it removes the need for costly mining equipment saving energy and resources of our real world. You just need to purchase the coins and hold them in your wallet.
The other benefit of staking is that it gives you an ensured and good supply of rewards. That is because of the increase in staking value of staked wallet with time of holding coins. It’s the equivalent to placing cash in a fixed deposit. You are ensured making more on your money safely.
