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What is staking and how does it work?
What is staking and how does it work?

Definition of staking and how it works

Alex avatar
Written by Alex
Updated over a week ago

Staking involves participating in a Proof of Stake (PoS) blockchain network by locking up, or "staking," a certain amount of cryptocurrency to support the network's operations.

Here's how it generally works:

  1. Ownership: Users hold a certain amount of cryptocurrency in their wallets.

  2. Staking: They lock or "stake" these coins in a wallet or within the network, essentially using them to validate transactions and create new blocks in a PoS system.

  3. Validation and Rewards: By staking their coins, users become validators and contribute to the network's security and functionality. In return, they receive rewards in the form of additional cryptocurrency. The more coins they stake, the higher their chances of being selected as a validator and earning rewards.

Staking incentivizes users to hold and support the network, as they earn rewards for helping maintain its security and integrity. It's a way to earn passive income in the form of staking rewards, but it often requires users to lock up their coins for a specific period, depending on the network's rules.

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