Staking is the process of keeping your cryptocurrencies locked in your wallet for a certain period of time without spending or transferring them to support the operations of a cryptocurrency chain. From these cryptocurrencies you lock, you earn a certain amount of reward cryptocurrencies during the period you lock. To lock your cryptocurrencies, you need a special mobile or computer wallet.
Staking is a concept that came to cryptocurrencies with the Proof of Stake (POS) mechanism. Its biggest contribution to the operation is to avoid wasting a large amount of processing power. Satking is also beneficial for supply and demand balance as it limits the amount of cryptocurrencies in circulation. The less money there is in circulation in the staking crypto money chain, the more probability its price will increase will increase in direct proportion. In other words, the more the staking coin is, the less likely the price will fall.
In short, what is Proof of Stake?
Proof of Stake is basically a system that allows a cryptocurrency mining to be done at the rate of cryptocurrency held in the wallet. With the Proof of Stake system, it allows the miner to do more or less according to the amount of crypto money in his wallet.
Proof of Stake was created as an alternative to the Proof of Work mining method. Proof of Work mining is done with high electricity consumption with special mining equipment. Large facilities and high electrical power are needed to gain profit.
How Does Proof of Stake Work?
Proof of Stake allocates the mathematical problems required for crypto money transfers according to the crypto currency you have, not the device and electrical power as in Proof of Work mining.
How Are Staking Rewards Calculated?
Mining earnings rates with Proof of Stake are dependent on the cryptocurrency to be mined. Basically, the higher your balance in your wallet, the more you earn.
Some cryptocurrencies do not allow cryptocurrency assets above a certain amount to be allocated to mining transactions with Proof of Stake in order to prevent inflation and to keep crypto money in circulation.
What is Staking Pool?
Staking pools are mining in which the same cryptocurrency is mined with Proof of Stake and where different people combine their assets to increase the rate of profit.
The awards won are distributed according to the asset ratio of the participants. Since the establishment, development and management of a staking pool are difficult processes, pool founders receive some of the reward earned as a result of mining.
What is Cold Staking?
Cold Staking is the name given to the mining process done with assets held in hardware wallets called cold wallets. With Cold Stake, users both protect their assets safely and earn rewards by mining.
If the user moves his / her presence in the cold wallet to a different address, his mining will also be stopped because he will be disconnected from the network. It is one of the most advantageous jobs for high asset holders. They can make a profit by keeping their balance safe.