What is Staking?


Simply put, staking is the process of buying and holding coins with the goal of receiving interest. It is done using a designated wallet on a network that uses the Proof of Stake consensus algorithm or some modification of it. Where staking differs from mining is in the fact that it doesn’t require a powerful machine, nor do you have to invest large sums of money to be competitive.
The more stakers there are in each coin’s blockchain, the higher the decentralization is and as a result, the network becomes more secure and provides equalized opportunities for everyone to earn an income. Some networks are hybrids and have chosen to use both Proof of Work (PoW) and Proof of Stake (PoS) as ways to reach an agreement to further increase speed and security.

What is a Masternode?

Masternode is defined as a governing hub in some cryptocurrency networks. It requires an initial collateral of tokens to operate. Masternodes play a role in certain block chains, at the time of the validation of the transaction. However, when it comes to masternodes, there is a minimum requirement of coins you need in order to host a masternode.

What is Stablecoin?

A stablecoin is a cryptocurrency that is meant to limit the volatility that investors experience when using crypto. Stablecoins are usually pegged to another asset with a stable value, but they may also be backed by an algorithm.
Consumers who are looking to buy or sell non-currency goods and services may experience a huge price change during or after the transaction. Stablecoins level the playing field without a need for either party to change back into fiat.
The Best Stablecoins Right Now: Tether (USDT), True USD (TUSD), Paxos Standard (PAX), USD Coin (USDC), Binance USD (BUSD), sUSD, Gemini Dollar (GUSD), Paxos Standard Token (PAX).

What Are Staking-as-a-Service Platforms?

Staking-as-a-Service platforms enable crypto investors to stake their stakable PoS digital assets via a third-party service that takes care of the technical aspect of the staking process. For this service, platforms charge a fee – usually a percentage of the staking rewards.
The idea behind Staking-as-a-Service platforms is to enable anyone – even those without technical knowledge – to take part in the staking economy.

How earn the providers the interest?

Your deposited crypto is lent to margin and short traders. A part of the loan interest the traders pay is then payed to you.
If you deposited stablecoins, they are usually lent to someone who takes a loan. A part of the loan interest the borrowers pay is then payed to you.
In other cases interest providers like new exchanges or projects offer interest to attract new users.
Finally the interest is earned by using your crypto for staking. Staked crypto secures a blockchain and earns interest in return.

What is APY?

APY stands for Annual Percentage Yield. This is the interest rate you get, if you deposit your crypto for 1 year. It also includes compounded interest.
Often APR is used instead. APR stands for Annual Percentage Rate and doesn't include the compounded interest.

What is a lock-up period?

The lock-up period is the period in which you are not able to withdraw your deposited crypto. The reason for this is, that the providers lend your deposited crypto for a specific period to margin or short traders or to someone who takes a loan. As long as they are lent, they are locked.
Please check the provider details to learn how long your crypto is locked.

In which currency is the interest payed?

Usually crypto interest providers pay the interest in the same currency as the deposited crypto (e.g. BTC deposited = interest payed in BTC). Please check the provider details for this information.

Is the interest rate fixed?

The interest rate is usually only fixed for a specific period. Please check the provider details for this information. Please check the provider details to learn how long the interest rate is fixed.