What is Staking?
Staking is a process used to validate transactions on certain blockchains. It involves users holding their coins in a wallet or other form of storage and making them available for use as collateral in order to help with the validation process. In return, they are rewarded with additional coins from the blockchain network. This reward is known as staking rewards or simply “staking”. Stakers receive these rewards based on their stake size, block times, and transaction fees associated with the blocks that they have helped to validate.
In contrast to mining which requires large amounts of energy consumption, staking does not require any specialized hardware or software and can be done by anyone holding cryptocurrencies in their wallets or exchanges. It also helps secure blockchain networks since it incentivizes users to hold onto coins rather than trade them away while still allowing them to earn passive income from staking rewards that come from validating transactions within the system.
Most Proof-of-Stake (PoS) systems offer various different types of reward structures depending on how much you put at stake and how long you hold your stake for e.g., daily payouts, monthly payouts etc.. The most common type are those where users actively delegate their funds towards validators who then take responsibility for securing the network – this type of reward structure usually pays out larger returns but carries more risk since it relies on trusting third parties with your money. Other PoS systems might offer fixed rewards over time regardless of whether someone delegates their funds towards validators or not – this type typically offers lower rates but provides greater security since there isn’t any delegation involved
