Crypto Staking

 

Crypto Staking - Broadly speaking, passive income is a way to earn money while you sleep without having to do anything. To put it simply, it's a method of depositing your own money and getting interest.

There are two types of staking. PoS Staking and DeFi Staking. Now I will talk about PoS Staking. About DeFi Staking, I will talk about it again in the next topic.

# Consensus

Those who have read the Bitcoin book will already know about Consensus Algorithms called Proof of Work and Proof of Stake. I would like to summarize again. For those who already know, read on.

Blockchain, which is the foundation of cryptocurrency, is a technology that works by recording transaction information in a network that can be accessed by anyone. Anyone can enter log information.

Everyone can enter, so what if all the pokies enter? To prevent this from happening, consensus has been established by the participants in the network. Proof of Work is asking you to do extremely difficult work and only allowing you to add information if you can do it. In this way, even if you want to add it, you won't be able to add it easily.

I really did the difficult work that I was asked to do, If other people on the network don't approve it, it will just be banned, so it won't be covered by adding it after being banned. If you can control 51% of the participants in the network, you will probably get it. It is not an easy task. This method is called 51% Attack.

The Network rewards those who do the really hard work and add information. Reward. This concept is called mining. I will do the hard work, I will add the correct information; Then you have to reward.

# Proof of Stake (PoS)

Proof of Work systems are good security because they are difficult to tamper with, but as a side effect they use a lot of energy to do hard work. That's why the cryptos that came out later developed new consensus. test Invented. One of the commonly used methods is Proof of Stake.

This way, instead of asking you to do the hard work, you are asked to stake something valuable. If you add it by chance, that pawn will be kept, so you can't add it. I will also give a pledge, If he adds the correct information, he will also get a reward. So, if you want a reward in PoS systems, you don't have to mine. Stake can be done by paying a pledge.

Therefore, the PoS system does not have the problem of excessive energy consumption that exists in the PoW system. It's faster because you don't have to spend time every time you add something.

Famous crypto projects such as Cardano, Polkadot, Solana, Polygon, etc. use the PoS system, and Ethereum currently uses the PoW system, but in ETH 2.0, it will change to the PoS system.

# Staking

He said that staking is a method of depositing your own money and getting interest. This is visible in the eyes. Actually, PoS staking means that you stake your own money and get a reward for working for the network.

When mining, some coils have less income and some coils have more income. In staking, some coils earn more and some coils have less income. Those who want to stake must search and choose. There are precalculations for this. You can see here.

https://www.stakingrewards.com/

At the time of this writing, Cardano (ADA) is earning a 6.3% annual reward. If you add 1000 coils, you will receive 63 coils in one year. More than (5) coils per month. It is 67% for PancakeSwap (CAKE), so if you put 1000 coils, you will be rewarded with 670 coils after a year. About 56 coils per month.

Let's guess, it's easy to calculate by eating with 12. In fact, it cannot be calculated. This is called APY (Annual Percentage Yield). For example - base (1000); If you get interest for one month (10), if you add the interest and principal in the second month, it becomes principal (1010). So, although I only get 10% interest for the first month, In the second month, we got interest (10.1). etc., because the compound interest is added together and calculated, in practice it cannot be said that you will get 670 coils per year and 56 coils per month. It will decrease.

Here is a new project where you will get 100% APY. 150% If you are talking about getting 200%, it is more likely to be a lie than to actually get it. Just add the base and it will run. Be aware of such things. It is more reliable to choose good rewards from famous projects.

However, you can't just look at the reward. the potential for price increases; Inflation remains to be seen. Since Cardano (ADA) only earns 6.3% per year, you can think that the reward is low. Although it is low, the price of ADA is now unfairly increasing. If you make a stake in a coil with bad prospects, your stake will decrease in value over time. Maybe not as much as you should.A promising coil has a low reward, but the amount of Stake you put in will increase in price and value, so it might be worth it to put it in.

# Staking with Wallet

You only need a wallet to stake and try it out. No other equipment is needed. For example, Trust Wallet is widely used. If you have some BNB coils, you can stake it and try it out. It's not difficult. Click on BNB and select Stake from the menu. Then you will be asked to choose which validator to delegate. Choose a Validator with a better Reward APY.

Currently, TW Staking provided by Trust Wallet for BNB is getting about 20% APY. You need to have at least 1 BNB and you can stake at least (7) days. When staked, the coils will be locked so they cannot be moved.

As a special feature, Staking of Cardano (ADA) does not need to be locked. Stakes are made, but the coils can be rotated if necessary.

So, if you are thinking about making a stake, you can see the reward APY that will be returned. You can choose which validator to delegate. How long to stake can also be considered. If you stake for a long time, you will get compound interest and more interest.

Binance App also has staking option. If you know that much, you can study it. One thing is that Staking is safe. Low interest rates will only go away, It can be said that there is not much to lose.

You won't get much. Since one coil of BNB is now more than $400, if you stake one coil, you will get back interest of only $6 per month. In terms of Burmese money, it means that you will get back about (9,000) per month from about (6) hundred thousand. Anyway, if it's free, it's an income.

# Validator | Masternode

It is not possible to do Stake with Wallet, but it can also be obtained by owning Validator Nodes and Masternodes. You don't need a lot of machine power, so if you have a VPS, you can get it. Anyone who has experience with hosting can do it. Technology is not difficult. The problem is the Minimum Staking Amount.

A Validator Node is a computer that takes a copy of the entire Blockchain and actually enters the records. If you want to see an example of how to set up, you can see the guide provided by Kusama (KSM), a prominent project.

https://guide.kusama.network/.../mirror-maintain-guides.../

If you look at it like this, someone who has used Linux Server a little bit can get an idea of ​​how to setup it. Masternode and Validator are not very different. Some projects have only one Validator Node and some projects are divided into Validator Node and Masternode.

If Validator and Masternode run, You will get more because you will get all the rewards yourself. If you choose a validator from a simple wallet, you will only get a proportional share of the reward you get from joining someone else's validator.

As mentioned above, the technique is not that difficult. You can even buy pre-setup VPS without having to do the setup yourself. Only $5 a month. The real problem is the Minimum Staking Amount. I would like to give you an example of a project where the APY is very good and the numbers are accurate.

There is a project called DeFiChain that can get up to 75% APY. If you want to become a Masternode for that project, you can stake at least 20,000 DFI coils. It's almost $3 per coil, so we'll add about $60,000. The reward that will be returned as APY is not less. You'll get back about $3,600 a month.

This means that if you earn about 1000 thousand (1000) and masternode, you will get more than 50 thousand (50) per month. Very popular. According to PancakeSwap, there are currently about 150,000 DFI Masternodes. If there are more nodes, the chance will increase, so the APY may decrease.

# Conclusion

As far as having a VPS is concerned, I thought I would try to see what the Masternodes would do. After actually trying it, I found the amount I would like to drink, and I wanted to get drunk. So I can't try it myself.

If you really can, try it. It can be said that staking is safer than mining because there is not much capital to spend and there is no need to buy expensive equipment. Be careful not to choose coils that you don't know what to expect. You have to choose a coil that has a good reputation and that you really know.