In the ever-evolving crypto world, there are many ways to optimize the returns on your crypto investments. One increasingly popular method is crypto staking, where you can earn rewards by storing and validating transactions on the blockchain network.
What is Staking?
Staking is locking crypto assets into a blockchain network to earn passive income without having to trade. Staking is similar to depositing money in a bank to earn interest. When you deposit money in a bank, it is usually loaned to others and you get a share of the interest charged to the borrower.
With staking, you are essentially locking up crypto assets to participate in running the blockhcain and ensuring its safety. This can be done on blockchains that use proof-of-stake consensus mechanisms, such as Solana, Cardano or Cosmos.
How Does Crypto Staking Work?
As we discussed earlier, a blockchain with a proof-of-work mechanism requires energy to add new blocks to the blockchain. Whereas proof-of-stake generates or validates new blocks through a staking process.
Staking requires validators or “stakers” to lock their coins and they will be randomly selected by the protocol at certain intervals to create new blocks. Usually, stakers who stake a larger amount of their coins have a higher chance of being selected as validators. Unlike proof-of-work where anyone can mine coins as long as they have a mining machine and the machine can run the hashing process.
Proof-of-stake validators are selected based on the number of coins in contention. The stake is if the validator fails to maintain the security of the network then the validator has the risk of losing the amount of coins that have been staked. However, if the validator succeeds in maintaining network security, the validator will get a token reward.
💡 You can also try crypto staking on Ageio Stagnum with the following networks
How to Calculate the Staking Reward?
Each blockchain has a different way of calculating staking rewards. Some use a method on a block-by-block basis. There are several factors that we can consider in calculating staking rewards, among others:
- how many coins the validator has staked.
- how long the validator has been actively staking their coins.
- how many coins are staked in the network in total.
- inflation rate
For some other networks, staking rewards are determined by a fixed percentage. These rewards are distributed to the validators and as the coins increase it encourages users to spend their coins rather than storing them.
The staking reward schedule can also be predicted as the validator assignment can also be predicted based on probabilistic odds. For example, in the Cardano network, staking rewards are earned at the end of each epoch which usually lasts for 5 days.
What is a Staking Pool?
A staking pool is a group of coin holders who combine their staked coins to increase their chances of validating a block and receiving a reward. They combine their staking power and share the rewards proportionally based on their contributions. Staking pools are more useful for new users who do not have sufficient funds or enough resources.
Staking pools can provide flexibility to stakers. Usually staking should be locked in for a certain period of time and have a time set by the protocol when staking can be withdrawn or released.
Staking pool operators will have various operational costs related to maintenance, server operating costs, website hosting and hardware. So, when you join a staking pool, there is a fee that you have to pay to the operator. This percentage of the fee paid to the operator is referred to as the stake pool fee.
How to Stake?
If you are just starting out staking and don’t have a lot of funds, it is highly recommended that you join a staking pool.
To start a staking pool, you will first need to download a wallet that allows you to stake. For example:
- Solana using SolFlare.
- Cardano using Daedalus Wallet
You will be asked to transfer a certain amount of coins into the wallet. Then you can choose a validator to delegate your coins. Before choosing a validator, you should do some research to choose the best validator according to your needs. Among other things, you must look at various aspects, such as operator fees.
Crypto Staking in the Ageio Stagnum App
Ageio makes it easy for anyone to stake Theta and earn Tfuel and AGT coin rewards. With its decentralized protocol, you can be assured of the safety and reliability of your staking investment.
When a user stakes asset (WTheta/ WTfuel Token or Tfuel) in the Ageio Stagnum pool, they will receive AGT tokens in proportion to the amount of asset they’ve staked, along with any Tfuel rewards received by the pool.
The reward calculation takes into account the amount of asset staked and the length of time it’s been staked. If a user chooses to claim their rewards, they can receive their Tfuel rewards and corresponding AGT tokens from the pool.
So let’s do it, what are you waiting for to generate passive income from staking in ageio stagnum? join now!