Crypto Academy / Season 3 / Week 1 - Homework Post for [Crypto Professor @imagen]

Introduction

Staking is one of the means crypto investors have been using in recent years to keep the smooth functioning of one of the popular consensus protocols on the blockchain system. Here this investor used the cryptocurrencies they hold to gain interest and make a profit. My research is base on cryptocurrency staking.

What is staking

Staking is when an investor locked up assets in a wallet to participate in an operation of a proof-of-stake on a blockchain system. Since Proof-of-stake required the participation of users who have staked their assets with the block rewards depend solely on the quality of asset stake by the different investors in a random selection combination.

So I categorically say staking is just a means for investors to have a share of the newly minted coins during block reward distributions.

How can I stake?

So far, I will mention two ways of staking that is:

• Staking-as-a-service provider
• Exchange staking

1.) Staking-as-a-service provider(soft staking)

This is a case where the investor does not border about the technicality involved in staking. This is done by a third-party platform that handles the staking processes for the investors who have staked their PoS digital assets. The main purpose of this platform is to give everyone the possibility to staked their stakable PoS digital assets. By easing this process, giving it the name "Soft Staking" since anyone in the PoS network who has a stake can earn tokens.

List of some Staking-as-a-service provider

• MyCointainer
• Stakinglab
• Stakewith.us
• Staked

MyCointainer

Screenshot

MyCointainer is an online platform founded in 2019 that allowed crypto investors to hold and earn profit from their PoS stakable digital assets. This platform can hold more than one PoS stakable asset for an investor.

How can I stake with the MyCointainer platform

• Visit website MyCointainer
• Create an account
• Buy or transfer the asset
• keep the asset
• Sit and wait

Which token can I stake with MyCointainer

Screenshot(MyCointainer website)

What More do you need to know when staking with MyCointainer?

• If you want to have a high return on your investment, you need to stake it for a longer period.
• You don't need any technical knowledge, just deposit your asset, sit and watch how your asset grows.
• The building exchange made it easy for investors to switch between their favorite coins without using external wallets for transfers.
• No restriction on withdrawal, meaning no limit, and the process is done in 24 hours maximum.
• Investing your assert in Mycointainer is base on your trust for the platform, while I will say I am worth your trust to stake your asset. I still expect you to do more research before using such online platforms.
• Lastly, to have access to all functionality, investors' accounts need to be verified following the terms and conditions.

2.) Exchange staking(staking services double)

This case is not different from Staking-as-a-service provide which I mention above, but the functionality of the platform makes the difference. With the coming play of cryptocurrency staking, some crypto exchange platforms decided to allow account holders to stake. These platforms gave holders of PoS stakable digital assets to earn interest in the trading wallets. As Staking-as-a-service provides, the exchange platform also takes care of the staking process for users.

List of Exchange staking

• Binance
• Kraken
• Poloniex
• Coinbase

Poloniex

Screenshot

Poloniex is an online exchange platform founded in 2013 by Tristan D'Agosta who is also the CEO of the company. This platform is one of the most popular crypto exchange which allows it users buy and sell digital assert. Poloniex platform has proven to be user-friendly with a high level of security for investors' assets.

How can I stake with the Poloniex platform

• Visit website Poloniex
• Create an account
• Buy or deposit the asset
• hold the asset at the time of balance snapshot
• Sit and earn regular

Which token can I stake with Poloniex

This platform is open for transactions of both stakable and un-stakable assets. Not all these assert are stakable on the poloniex platform.Poloniex stakable asserts are Tron(TRX), BitTorrent(BTT), WINK(WIN), Cosmos(ATOM), Tendies(TEND).

What More do you need to know when staking with Poloniex?

• Your asset is not locked up
• You are free to withdraw and trade your PoS digital asset
• Most of the stakable assets are free with a 4-day snapshot interval and weekly reward.

My Stake earnings

Screenshot from my poloniex wallet

1. BTT staking interest
2. Tron staking interest

Compare

After going through the two platforms, I recommend the Exchange staking platform(Poloniex) over the Staking-as-a-service provider platform(MyCointainer).

• I have been using the Poloniex platform for the past months and more familiar with the functionality of the platform. Rather than a platform that is new to me.
• The flexible nature of the Exchange staking platform(Poloniex) where investors can trade, deposit, and withdraw at any time.
• Exchange staking platform(Poloniex) offers fee-free stake to most of the stakable assets is an upper hand over the Staking-as-a-service provider platform.

What is impermanent loss?

When your initial amount (asset) starts changing in price, and the equivalent in dollars reduces, you are experiencing impermanent loss. This has to do when you provide liquidity to a liquidity pool. This means the current amount in your wallet is less than what you initially deposited. The difference between what you are holding at the moment and what you initially deposit is the impermanent loss for the token.

Most of this happens because of arbitrage traders who add and remove, playing with two token ratios to reflect the current price at the moment to that of the pool. This is done by arbitrage buying of underpriced and selling of overpriced to balance the external market of both tokens in the automated market maker. Due to the adding and removing to the pool

What is Delegated Proof of Stake(DPoS)?

The ability for users to vote for delegates who make important decisions on a blockchain network is known as Delegated Proof of Stake. It is a consensus algorithm mechanism that is done by the holder of a blockchain coin on the network. DPoS is not different from PoS as both users are expected to stake coins to participate in the consensus.

DPoS, the validation of transactions is done by the delegates who are voted by the users holding the coins of the blockchain network. The higher the number of coins a user has, the higher the user voting influence to decide which delegates are elected in the network. For a delegate to be elected, the delegate asked for votes by presenting a proposal to users. Most proposals are about how coins will be earned for validating transactions and to keep the network secure. This has to do with the honesty of the delegates on the network while trying to make sure all transactions are valid before the validated, honest ones (delegates) will earn rewards, and the voters will benefit.

Different between DPoS and PoS

• DPoS can not be used on a decentralized network while PoS can be used.
• DPoS can not be forked which is an added advantage over PoS which does not have the property of finality.
• DPoS has a high validation speed in the transaction of blocks since delegates are closed to each other.
• DPoS uses less hardware and energy efficiency than PoS
• DPoS only delegates who are voted by holders of the blockchain coin to participate in validation while PoS all coin holders participate in the validation.

Examples of Delegated Proof of stake projects

• Tron

Users on the tron network can vote up to 5 delegates, who are called super representatives per election. The Tron coin holders vote delegates every 24 hours, and top delegates will go ahead to validate the transaction on the Tron network. The delegates are then rewarded according to the voting power, which is also influenced by the number of coins the user holds during the voting window.

Conclusion

Staking just a means investors have been using in recent times to increase their profits by holding blockchain coins in their wallets. Online platforms have come to play to help investors with the technical aspects of staking, so investors just deposit and wait for notifications in their wallets.

Most complicated for me during this course has been the impermanent loss. The concept seems easy to understand, but how arbitrageurs play the underpriced and overpriced of token to balance the Automated market maker with externally market. I will have to do more reading in domains to understand this mechanism.

Thanks, @imagen for letting me understand the rewards I have been earning in my poloniex wallet for some time now. Hoping you part of your next exciting course