What is Staking?
Staking is the process of actively participating in transaction validation (similar to mining) on a proof-of-stake (PoS) blockchain. Anyone with a minimum-required balance of a specific cryptocurrency can validate transactions and earn Staking rewards.
Crypto staking is a trend that has emerged in response to the growing energy demand resulting from Proof-of-Work (PoW) protocols such as the one used by the Bitcoin blockchain to validate transactions.
How do Staking and PoS work?
- When the minimum balance is met, a node deposits that amount of cryptocurrency into the network as a stake (similar to a security deposit).
- The size of a stake is directly proportional to the chances of that node being chosen to forge the next block.
- If the node successfully creates a block, the validator receives a reward.
- The main idea is that participants can lock coins (their “stake”), and at particular intervals, the protocol randomly assigns the right to one of them to validate the next block.
- Typically, the probability of being chosen is proportional to the number of coins – the more coins locked up, the higher the chances.
- This way, what determines which participants create a block isn’t based on their ability to solve hash challenges as it is with Proof of Work. Instead, it’s determined by how many staking coins they are holding.
It is argued that the production of blocks through staking enables a higher degree of scalability for blockchains. This is one of the reasons the Ethereum network is planned to migrate from PoW to PoS in a set of technical upgrades collectively referred to as ETH 2.0.
Features of DAO1 Staking
DAO1 Staking is a game-changer in the Crypto Staking market. It has 3 key differentiators.
Low-interest rates offered by banking institutions on fiat deposits make staking an attractive option for cryptocurrency holders by providing passive income-earning opportunities like never before.
DAO1 implements a simplified high reward staking mechanism that allows community members to earn better returns than any deposits, currently available on the market. By staking DAO1, the community members will become eligible to receive a portion of the revenue as staking rewards along with any applicable bonus.
The revenue sharing mechanism, as well as bonus pay-outs, will be reviewed at regular intervals and any changes to them will be implemented through community-based voting.
This is a clear example of how DAO1 promotes “for the community, by the community”.
The staking mechanism will not only benefit the community but also drive demand for DAO1 in the market, thereby enhancing its value through appreciation.
Lastly, DAO1 provides a seamless and flexible approach.
Users can choose to stake however much they want, for whatever duration they wish, and earn proportional rewards. The platform will offer a user-friendly DAO1 wallet application, which will include an in-built staking feature that allows automatic staking of funds available in the wallet.
The rewards are calculated on a 24-hour basis and credited to the respective wallets at the end of each staking cycle. DAO1 also offers a fixed staking feature for those in favor of long-term staking.
Stay tuned for further updates on Incubation Coming very soon!