In the crypto world, the term stake refers to crypto that users own and store in the system to participate in the verification and validation of transactions.
This complex mechanism is carried out to achieve distributed consensus, which is a condition in which the system runs safely and is decentralized because transaction verification is carried out by other users. In the PoS system, no miners compete to use their computer power to process transactions and earn rewards.
Well, staking is an activity when carrying out the PoS consensus. When the crypto you own is locked, that’s what staking is all about. But the user can still remove it if we want to exchange it.
As an example, let’s see how it works Cardano or ADA is a decentralized third generation proof of stake (PoS) blockchain platform designed to be an alternative to proof of work (PoW) networks. Anyone with cardano can stake and set up their own validator node on any available platform. When cardano needs to verify a block of transactions, the proof-of-stake ouroroboros protocol selects the validator. Then, the validator will check the blocks, add them, and receive more cardano for them.
Staking requires almost no computing power, which reduces energy utilization. This is one of the main indicators of its success. Any normal cell phone and laptop is sufficient to carry out this process.
Staking can be done without accessing the internet. In the crypto world, this is called “Cold staking”, which means without an internet connection. You can leave stock in your wallet and continue to earn interest even if you forget that you are in the process.
A Miner can also stake for new blocks on the blockchain. This conception is to make a refundable deposit which aims to prove that you have invested in the profits of whatever you make.
Staking is safe and easy and more effective. Apart from this, this process does not require much knowledge but intelligence. The procedure is to buy coins on a trade and deposit them.
Staking provides guaranteed and predictable earnings interest over time. This process is much more profitable than putting money in a savings account.