Decentralized Staking

What is Staking

Every cryptocurrency transaction should be verified – that's how blockchain works. Validation guarantees transaction is proceeding without any false data. To get transactions validated, they should be approved and added to a block by miners in Proof-of-work blockchains, like Bitcoin, or approved by validators in Proof-of-Stake blockchains. Proof-of-Stake (PoS) is a consensus algorithm where you can stake your coins and receive rewards for transaction validation or receive dividends for holding funds. With the increase of mining difficulty, staking became more and more attractive for cryptocurrency investors. With Atomic, every crypto holder can receive regular rewards in a truly decentralized way. We didn't collect any fees – you get a profit directly from validators.

Staking is as simple as it sounds, the process of locking away tokens or coins in a cryptocurrency wallet to generate a reward. Staking is very easy to carry out and does not require expert knowledge or skills in most cases. This means that it can be done straight from a cryptocurrency wallet such as Atomic Wallet, for instance.

Whats is Proof of Stake (PoS)

Understanding Proof of Stake (PoS), which is a consensus mechanism that rewards users for validating (confirming) blocks on the blockchain, will enable you to better grasp the concept of staking. Initially, staking was first implemented by a cryptocurrency known as Peercoin in early 2012 by Sunny King and Scott Nadal. Peercoin was created as a hybrid PoW/PoS cryptocurrency that derived from Bitcoin's technology. Today, the technology has dramatically improved and is more widespread as more and more blockchains implement Proof of Stake.

What is Delegated Proof of Stake (DPoS)

On many blockchains today, users can vote on various actions depending on the number of tokens they have staked. This voting mechanism ensures that users participate in securing the blockchain with their vote. Voting can also help steer a project by the users' decisions; however, their voting power depends on the number of coins they hold. 

Ethereum's Beacon Chain mainnet was successfully voted on before December 1st, 2020, which initiated the process of staking 2.0. If the voting were unsuccessful, Ethereum 2.0 would have been pushed back. DPoS also enhances network performance since it allows consensus to be reached with less validating nodes. DPoS was first used in 2014 by Daniel Larimer, who came up with the term.

How does staking work

You might now be wondering how staking works? Well, as mentioned earlier. It is quite simple and straightforward, even for a beginner. Let's take, for instance, the staking of Cardano's ADA coin in Atomic Wallet. In this case, what happens is that the amount of ADA that you want to stake is sent to a pool, for instance, the Atomic Pool. All other ADA tokens are sent to this pool to aid in the consensus mechanism and are locked until the user unstakes. 

Staking pools are the pooling of resources by different holders of a coin to maximize the rate at when blocks are validated. Based on the number of tokens staked by each user, a reward will be given when new blocks are mined. Rewards are then deposited in your wallet and can be easily claimed whenever you are ready. For each transaction, such as starting a stake or claiming a reward, you will need to contribute a small fee to the network using ADA tokens to initiate each transaction.

Decentralized staking in Atomic Wallet

It is important to note that there are two types of staking, centralized and decentralized staking. As previously mentioned, staking Cardano's ADA in the Atomic Wallet is considered decentralized staking when you do not rely on a central authority to hold your coins or private keys to your wallet. Rewards are also deposited in your personal wallet after you have claimed them at your convenience. 

On the other hand, centralized staking occurs outside of your personal wallet, such as on an exchange like Binance. This means that you rely on them to keep your ADA, and any rewards you earn will be deposited to your Binance account and not in your personal wallet.

How to stake funds in Atomic in the step-by-step guide:

Staking funds in the Atomic Wallet is not difficult and can be done with a few steps as described below. In order to begin staking your favorite cryptocurrency, you can follow these steps:

1. Acquire your tokens by sending, purchasing, or exchanging other tokens in the Atomic Wallet.
2. Select the 'staking tab' in the Atomic Wallet to ensure that your token is eligible for staking
3. Choose the Atomic Wallet staking pool or a custom one if you are an advanced user
4. Type in the number of tokens that you wish to stake and click 'Stake'.
5. Your tokens will then be sent to the blockchain for staking in the pool that you have selected.
6. You will then receive your rewards directly in the wallet after claiming them when available.

Assets available for staking

Atomic Wallet is constantly adding new assets every week, so you can bet that you will find your favorite coins that you can stake. Currently, the supported list of assets that are available for staking includes ZIL, ADA, AWC, ICX, ATOM, XTZ, TRX, BAND, NEO, KMD, ALGO, VET. The ROI for each asset also varies, so it is important to note this as well. 

Assets such as ZIL offer an ROI of 16%, which fluctuates and is not locked at that rate. ADA and TRX offer a 5.1% ROI for staking. AWC gives the highest return of 20% ROI at the moment. ICX and ATOM both offer a 10% return on your investment. XTZ staking rewards are capped at 7%, BAND at 17%, NEO at 1.4%. KMD, ALGO, and VET return on investment are 5.1%, 7.2, and 1.63% respectively. 

The chart below can be viewed for a better visual experience on the assets available for staking and their ROI. 

Atomic Wallet is one of the most straightforward wallets to stake your funds right now. This guide will teach you how to go about staking after you have sent or purchased your eligible cryptocurrencies. This is also applicable for just about any cryptocurrency that you might want to stake as long as the wallet supports it. 

It's more evident every day that the cryptocurrency space is growing like wildfire, and earning passively through staking is a big move to mass adopt these assets. We hope that this guide has helped you to understand better how staking works so that you can start earning passive income straight from your wallet! Additionally, You can begin to staking from just about any device. Download Atomic Wallet for your devices so that you can access your funds from anywhere. Our app is available on Android, IOS, PC, Mac, and Linux.