PoS – Proof of Stake and PoW – Proof of Work are two types of consensus mechanisms that are unique and common in the technology of cryptocurrencies today. In which PoS is considered as a consensus mechanism to replace and dominate in the future for PoW which consumes energy.
The word PoS is known as the new way to invest in cryptocurrencies, which is Staking. So what is Stake coin?
What is Stake Coin?
Staking is known as locking cryptocurrencies and getting many rewards. In some situations you can directly accumulate your coins from an electronic wallet, such as Trust Wallet. Currently, exchanges have provided Staking services to serve users when using. Binance will allow users to earn rewards in an easy way.
So according to what Stake coin is, that amount of coin is likely to be locked in the wallet or the nodes of the Blockchain project for a period of time. And this reward will depend on the user’s effort, including: Stake duration and stake coin amount.Move to Trash
How will Staking rewards be calculated?
With the information about Staking coin mentioned above, how is the Staking reward calculated? Staking rewards will not have any specific calculation, but each Blockchain network can use a different reward calculation.
Some calculations are adjusted on a per-block basis, based on various factors. Which includes:
How long has the validator accumulated.
How many coins has the validator accumulated.
How many coins are officially accumulated on the network.
How Stake Coin Works
The PoW Blockchains that mine to add new blocks to the PoS Blockchain will in turn confirm and generate new blocks via Staking. The staking process will work depending on validators and will lock coins to be randomly selected at specific time intervals to generate blocks.
Usually participants with more accumulated coins have a better chance of being selected as validators for the subsequent block. Accordingly this will allow blocks to be generated without having to rely on dedicated training hardware. While mining with ASIC requires a substantial investment in hardware.
Staking requires a direct investment in the cryptocurrency itself. So instead of competing for the next block with computation, PoS is selected for the amount of coins deposited. As such, Stake will incentivize coin holders to maintain network security.
But if progress fails then all of their stakes may be at risk. Therefore, it is important to understand Stake well. In Vietnam Staking simply works by just keeping the right coins in the wallet and basically allows participants to perform various network functions and exchange for Staking rewards.
Risks of Staking
During the Staking period, the amount of Stake coins is locked. As such, you will not be able to conduct any trading or trading transactions with this amount of coins. If you un Stake, it will take you a while to get back the coins you brought Stake and do not receive the reward. It is also possible that when receiving that amount of coins, the investment opportunity will also run out.
Staking is not always profitable and the big risk to face is the price of the coin going down.
The above article has talked about important information regarding what Stake coin is and what you should be aware of. Hope this useful information has helped your investment process.