Understanding - Article 1
"The Internet Bond: the risk-free rate for a decentralised financial ecosystem
Understanding - Article 2
Staking opens the door to more active participation in the digital economy
Understanding - Article 3
Staking: the basics
Understanding - Article 4
Staking: what opportunities?
Understanding - Article 5
Mapping: the main players in the staking industry
Understanding - Article 6
Laszlo Szabo (Kiln): "We're going to offer all the varieties of rewards that blockchains can generate
Going further - Article 7
Liquid staking: a revolution in democratisation
Going further - Article 8
Lido: a protocol with a systemic role
Going further - Article 9
Ethereum ETF: the immense prospects for staking
Perspectives - Article 12
William O'Rorke (ORWL Avocats): "I anticipate gradual action by regulators to limit the risks for the general public".
Perspectives - Article 13
Summary: an increasingly complex environment brimming with opportunities
Perspectives - Article 10
Restaking and EigenLayer: a new wave of opportunities
Perspectives - Article 11
Cosmos: staking your way to airdrops

Staking: the basics

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Staking: the basics

Staking is based on the Proof of Stake (PoS) consensus mechanism or its variants. Unlike the Proof-of-Work (PoW) used by Bitcoin, where the security of the network is ensured by miners performing complex computer calculations, PoS ensures the security and integrity of the network through participants 'staking' or immobilising their cryptocurrencies.

What's the point of "staking"?

By staking their cryptocurrencies, users actively participate in various network operations, such as validating transactions, creating new blocks, or taking decisions in network governance.

What's in it for us?

In exchange for their participation, stakers receive rewards. These rewards generally come from network transaction fees or the creation of new tokens. The reward rate can vary depending on the cryptocurrency and the amount staked (see Chapter 2).

What are the drawbacks?

In order to protect networks, it is not possible to instantly withdraw funds that have been staked. It is often necessary to wait several days or weeks after requesting the withdrawal of the funds. This disadvantage has now been overcome by liquid staking (see chapter 5), devised by the Lido protocol teams (see chapter 6).

What are the risks?

While staking can offer a passive return, it does involve risks. For example, you may be subject to "slashing", a type of penalty that punishes bad validators who do not respect the rules pre-established by the community. The latter are then subject to a deduction from the crypto-currencies they had immobilised.

How is it accessed?

Staking is accessible via various interfaces, including exchange platforms (Coinbase, Binance, etc.), specialised platforms (Kilnn, etc.) and the Internet.), specialist platforms (Kiln, Figment, Meria, etc.), specialist wallets (MetaMask, Trust Wallet, Keplr, etc.) and directly on blockchain networks. In most cases, the latter option requires solid knowledge and dedicated hardware to run nodes.

How much does it cost?

Participation requirements vary, with some cryptocurrencies allowing staking with small amounts, while others may have higher requirements. For example, you need to tie up 32 ethers (ETH), or around €70,000 at the end of January 2024, to become a validator on Ethereum. Those wishing to store smaller amounts can use service providers or protocols that pool the funds of several users. On Cosmos (ATOM) or Solona (SOL), for example, there is no minimum.

What's the environmental impact?

Staking is seen as a greener alternative to Proof-of-Work mining (like Bitcoin), as it requires far fewer computing resources and energy. Ethereum is said to have reduced its energy consumption by more than 99% by switching to Proof-of-Stake in September 2022.

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