Staking crypto explained
Staking is the process of holding funds to receive rewards, while contributing to the operations of a blockchain. As such, staking is widely used on networks that adopt the Proof of Stake (PoS) consensus mechanism or one of its variants.
Unlike Proof of Work (PoW) blockchains, which rely on mining to validate and verify new blocks, PoS algorithms produce and validate new blocks through staking cryptocurrency such as ADA for example. This allows the production of blocks without relying on mining hardware. So, instead of competing for another block with computational work, PoS validators are selected based on the number of coins they commit to deposit (stake).
Users who are staking more crypto coins usually have a better chance of being selected as the next validator block. While ASIC mining requires significant investment in hardware, staking crypto requires direct investment in cryptocurrency. Every blockchain PoS project has its own staking crypto.
Staking crypto is safe
Your ADA never leave your wallet and you can spend or transfer them at any time. You can delegate staking from your wallet to the pool of your choice. The only risk from staking is that at some point the pool where you delegated your stake is not operating well and not creating any block so you will miss out on rewards.
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