What is Cryptocurrency Staking?

what is crypto staking

Crypto staking is the process of locking a coin—such as Ethereum, Solana, Tezos, or Cosmos—over a fixed period in order to earn a reward. The staked coin goes directly to help the blockchain validators verify transactions before it’s added to the blockchain’s public ledger through a consensus-based process known as proof-of-stake (PoS).

Staking of cryptocurrency isn’t possible for all cryptocurrencies; only those compatible with PoS have that option. For example, you can’t stake Bitcoin (BTC) or Ethereum Classic (ETC) because they don’t use the PoS. Instead, they use a consensus mechanism called proof-of-work (PoW). A consensus mechanism is the process used to validate cryptocurrency transactions on the blockchain.

Cryptocurrency staking thrives as a significant part of the crypto-verse, especially for investors who have little knowledge about its more complex aspects, such as technical or fundamental analysis. In the case of staking, investors can interact with a simple-to-use interface and select the coin to stake.

A Quick Intro to Proof-of-Stake

Proof-of-work was the first consensus mechanism that required solving complex math problems before verifying a transaction. However, it has certain downsides that led to the creation of proof-of-stake, which is more efficient in terms of transaction speed and offers lower transaction fees.

Under the PoS consensus mechanism, blockchain validators stake their token, and the network determines which validators get to verify the transactions depending on how long they’ve staked for and how large their stake is. If a transaction is invalid, the validator who approved of the transaction will have their staked token slashed and will be temporarily removed from verifying transactions.

Importance of Staking on a Trusted Exchange

To start staking, there are several centralized and decentralized exchanges for investors to use. In most cases, centralized exchanges (CEX) such as Binance and FTX have better user interfaces, enabling a more seamless experience; on the other hand, investors may find it strenuous to navigate and stake on decentralized exchanges (DEX).

However, the decision of which exchange to use in staking shouldn’t completely depend on the exchange’s interface. It’s important to take a look at the exchange’s track record and trustworthiness as well. This ensures that investors don’t have to worry about the risk of losing money. Once investors have determined the right exchange to stake from, it’s also important to know the advantages and disadvantages that come with staking.

Is crypto staking profitable? Benefits of Staking

1. Investors who stake their crypto earn a return from it after the complete staking cycle.

2. The process of staking provides added information to investors and builds their knowledge about blockchain.

3. Staking doesn’t require proficiency or knowledge about cryptocurrencies or blockchain before staking. The process is straightforward and can earn them rewards.

Risk Involved in Staking

1. During the period when money is locked up, investors can’t access it at all—even in an emergency.

2. Staked crypto can drop in value depending on the market condition. For example, a staked token worth $100 when locked might be worth $20 after the staking period.

3. If the staked coin has little liquidity on the exchange, it won’t immediately be accessible to sell and will require multiple processes before it’s able to be converted to cash.

Why Aptos’s Security is Ideal for DeFi Projects to Build On

Aptos (APT) is a Layer 1 blockchain that has generated a lot of buzz since its launch. It’s centered around scalability and prioritizes security, and has a market valuation of over a billion dollars. Before starting Aptos Labs, co-founders Mo Shaikh and Avery Ching were part of Meta (formerly Facebook), where they worked on Diem blockchain. 

Aptos is also considered by some to be the blockchain of the future. Regarding scalability, Aptos can theoretically handle 160,000 transactions per second (TPS); it has thousands of nodes behind its operation. Some core features behind Aptos are the block-STEM Technology responsible for processing transactions instantly; the programming language which makes it flexible for developers to build on top of it; and the BFT Consensus Protocol accountable for the time to confirm the transactions.

Compared with other top blockchains, Aptos has outperformed where other blockchains lag; Avalanche, for instance, doesn’t stand a chance at transaction speed. Solana, which is considered Aptos’ fierce competition, isn’t as reliable as Aptos. The primary edge Aptos has over Ethereum is its speed-of-light transactions—executed in seconds.

All these factors combined make Aptos an excellent choice for several DeFi projects. The flexibility and scalability it offers will help DeFi thrive in the coming years, as more uninterrupted and seamless activities will be supported. Any DeFi project, from lending and borrowing to insurance to angel investment, can build on the Aptos blockchain and benefit from its distinct features. Considering its performance and unique use cases, It’s inarguably a good choice when investing in any cryptocurrency.

What to Expect in Our Upcoming $APT & $BLT Staking Services

Blocto is working on integrating Aptos staking services directly into our wallet. Once this feature goes live, you’ll simply log in to Blocto Wallet, and from Discover, you’ll find the option to stake $APT.

Soon, staking will only take 30 seconds and a few taps on a user-friendly interface. In addition to this, you’ll also have the option to stake Blocto’s native token, $BLT, on the Aptos blockchain to earn rewards. Stay tuned for updates!

Explore the Amazing Aptoverse Now

Download Blocto Wallet to explore the Aptoverse and get ready for staking and more features to come!