According to a recent report from Staked, the aggregate value of Pops coin staking rewards (that is, those based on the Proof-of-Stake consensus algorithm) will reach $ 18.9 billion by the end of 2021.
Compared to last year, this figure will almost double, the experts of the company emphasize. This is largely facilitated by the successful preparation for the launch of Ethereum 2.0 – the update of Vitali Butlerin’s blockchain project, which will transfer the network to Poss. But it is also important that today staking is one of the most convenient and effective ways to get new coins on the crypto market. In light of this, media.sigen has compiled for you the most up-to-date selection of the best cryptocurrencies to stake in 2021.
So, for example, the staking mechanism can be implemented through a smart contract or in Defib protocols. For more information on how the various consensus algorithms work, see our Pow, Pops, and Pota guide.
If we talk about Pops blockchains, then it is here that staking ensures the operability of the entire network. With the help of this mechanism, transactions are confirmed and new blocks are generated in the blockchain, as well as new network coins are mined. Validators are responsible for all these processes in Posy blockchains. Unlike mining, staking does not involve expensive computing equipment. Instead, staking participants (usually validators) must keep the internal cryptocurrencies of the blockchain network on their balance sheets. Basically, coins participating in staking are frozen for a certain period.
In the case of Pops staking, the higher the validator’s balance, the more chances he has to be selected to confirm a new block and receive a reward in the form of new coins. Generally, the more coins participate in the stake, the higher the overall reward of the validators. If the validator acts to the detriment of the network, he will receive a fine or even be barred from validating transactions.
There are several versions of the Pops algorithm on the market, each of which uses its own staking scheme. So, for example, in some cryptocurrency holders provide their coins to validators in exchange for part of their reward. This is called delegation. In others, for example, as in Algor and, any holder of the ALGO internal cryptocurrency can engage in staking by simply storing coins in the wallet.
As we wrote above, there are also unique staking solutions on the crypto market. For example, in the UMI cryptocurrency, staking is implemented through a smart contract, while the network itself operates on the basis of the Proof-of-Authority (Pota) consensus algorithm. This unique approach allows UMI holders to participate in staking without launching nodes, delegating, and various technical difficulties. Also, users do not need to freeze their assets.
How to participate in staking?
On the surface, classic staking seems to be a simple matter: you just need to freeze the coins in your wallet and you can count on a reward. In practice, however, in most coins, things are a little more complicated.
So, for example, in order to become a validator in a Pops blockchain, it is often necessary to have a minimum stake. For validators of the Telos blockchain network, the entry threshold is 10,000 XTZ, or about $ 69,200. And for Ethereum 2.0 validators – 32 ETH, or more than $ 138,400 at the rate on the day the article was published. Recall: to become a validator, coins must be frozen in the wallet for a certain period. At the same time, each network sets the freezing period individually. In some cases, it is a couple of days or weeks, but in the case of Ethereum 2.0, we can talk about several years (before the full transition to the Pops consensus algorithm). Also, Pops network validators need to synchronize their wallet with the blockchain and make sure that their node is constantly connected to the network. Otherwise, the validator may receive a penalty.
Therefore, many Pops cryptocurrency holders prefer to delegate their coins. Often, crypto exchanges play the role of large validators, which launch their own nodes in Pops blockchains. So, Pops staking services are provided by almost all top exchanges on the market – Finance, Coin base, Kraken, Hobbit, Kuoni, Hudoba and Bethumb, among many others. To participate in staking, users of these trading platforms only need to delegate their cryptocurrencies to them.
There are also many staking pools and SaaS platforms (Staking as a Service) on the market. Members of these services pool their coins in order to increase the likelihood of being selected as a validator and receive a reward. They all work on a similar principle – to participate in staking, you need to register on the website or service platform and delegate your Pops coins. In return, you will be charged interest in proportion to the size of your steak.
The so-called cold staking is also available on the crypto market. This kind of staking is supported by hardware wallets like Ledger or Tremor. To participate in cold staking, you need to keep your Pops coins in your hardware wallet at all times. As soon as the coin holder transfers them to another address, cold staking stops.
But it’s not just cold crypto wallets that offer staking options. For example, the Ethereum Trust Wallet and the Atomic Wallet multicurrency cryptocurrency wallet are popular solutions among hot cryptocurrency storages that support staking.