What is Staking?

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Dan from Steaking.io Team
Dan from Steaking.io Team

What is staking?


Staking is when owners of an asset, such as Solana, offer their assets to be used to ensure the functionality and security of the blockchain. In return, the owners of the asset are rewarded by the blockchain.


Why should I stake my crypto?


Staking is an integral part of blockchains that use the Proof of Stake protocol (PoS). Not only does staking validate transactions within the blockchain, staking your crypto allows you to participate in governance which promotes decentralization. Participating in governance is similar to shareholders of a security having a say in the operations of a company — allowing for things such as Improvement Proposals.


Staking rewards are a great way to generate passive income on investment. By staking your crypto, you can expect to earn a healthy yield — usually double-digit percentages. Therefore, if you have a coin you plan on holding long-term, you may gain even more value from it by staking it.


What are the risks when staking?


There are several potential risks that should be kept in mind before staking your crypto. The largest risk that investors face when staking is market risk. This is when the underlying asset falls in value, which if greater than your yield, would mean an overall decrease in value. Another important risk to consider is lock-up periods. Lock-up periods are when staked assets cannot be accessed for a given amount of time following the delegation. The lockup period for Solana is one Epoch, which can be up to two days.


Some other things to keep in mind are validator risk — if the validator is not running efficiently or the node malfunctions, validator costs —  the cost usually a percentage fee taken by the validator owner, and liquidity risk — if there is little liquidity it may be hard to sell your tokens or convert them into other coins.


How can I stake my coins?


Here are 3 simple steps to start staking your own crypto:


1. Click "Launch App" on the top right to get to our dashboard.


2. Once you’re on our dashboard. Click “Connect” to connect your wallet. Select the wallet extension that you want to connect with Steaking and where you have your funds.


3. Click “Stake” on the top center and then create a stake account by clicking “Create a stake account”. On the popup, input the amount that you want to stake. Be sure to read the disclaimers. Once you have your stake account, click “delegate” and select a validator to stake to! 

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