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If a cryptocurrency you own allows staking — current options include Tezos, Cosmos, and now Avalanche (via the new ETH2 upgrade) — you can “stake” some of your holdings and earn a percentage-rate reward over time. The reason your crypto earns rewards while staked is because the blockchain puts it to work. Cryptocurrencies that allow staking use a “consensus mechanism” called Proof of Stake, which is the way they ensure that all transactions are verified and secured without a bank or payment processor in the middle. Your crypto, if you choose to stake it, becomes part of that process.
You may have heard of Ethereum’s transition to Proof of Stake. It’s been a long time coming and the hype is epic, but what’s it all about?
First, bear in mind that PoS is not just about Ethereum, and it’s nothing new. Fully operational PoS blockchains include Avalanche, Polkadot, and Cardano and others.
Simply put, proof of stake (POS) protocols are a class of consensus mechanisms for blockchains that work by selecting validators in proportion to their quantity of holdings in the associated cryptocurrency. This is done to avoid the computational cost of proof-of-work schemes.
Earn rewards
Rewards are given for actions that help the network reach consensus. You'll get rewards for running software that properly batches transactions into new blocks and checks the work of other validators because that's what keeps the chain running securely.
Better security
The network gets stronger against attacks as more AVAX is staked, as it then requires more AVAX to control a majority of the network. To become a threat, you would need to hold the majority of validators, which means you'd need to control the majority of AVAX in the system–that's a lot!
More sustainable
Stakers don't need energy-intensive computers to participate in a proof-of-stake system–just a home computer or smartphone. This will make Avalanche better for the environment.
It all depends on how much you are willing to stake. You'll need 32 AVAX to activate your own validator, but it is possible to stake less. That is where Defistake comes in, you can stake lower amounts of AVAX and few selected cryptocurrencies using our staking pools, This is called pooled staking. Defistake also provides Liquid staking which enables easy and anytime exiting and makes staking as simple as a token swap.
Defistake is the largest independent blockchain infrastructure platform connecting institutions and developers to leading networks. Let's build together!