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

in SteemitCryptoAcademy3 years ago (edited)

This is Season 3 Week 1 of Steemit Crypto Academy and I'm writing Homework Task for Professor @imagen

Task 4 by salmanwains.png

Q1.

Research and choose 2 platforms where you can do Staking, explain them, compare them and indicate which one is more profitable according to your opinion. (Binance is not allowed)


Staking is an indirect way of earning profits from cryptocurrency. In Staking, you stake or block your assets on a platform. In doing so, the platform rewards you for contributing to its liquidity and strengthening the platform. 

Two platforms:

I choose Kraken and Poloniex as exchanges where we can do staking.

1) Kraken

Kraken is a well-known exchange. It belongs to the United States. It came into being in 2011. Being an accredited exchange, it offers a number of features prominent exchanging, buying, selling, and staking cryptocurrency. It also allows crypto to fiat transfers. Kraken is available in many countries and supports a large number of trading pairs.

How to stake coins on Kraken?

You can stake coins on Kraken by creating an account. To open an account, follow this link https://www.kraken.com/sign-up 

After making an account, you can start staking; otherwise, follow this link to know about staking on Kraken https://www.kraken.com/features/staking-coins and signup

Step 1) Open the above link and then click on Get started.

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Step 2)
After you select to get started, signup page will appear.

Fill in your details correctly, and then tick the dialogue. Click on create an account. 

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Step 3) Activate your account by adding the key sent to your email.

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Step 4) After activating your account. Open this link https://www.kraken.com/features/staking-coins and you will see variety of coins or options to stake with different reward options.

  1. Buy any crypto asset
  2. Select any asset from your holdings which you want to stake
  3. That's it, earn rewards from staking.

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We can stake any coin of our choice as rewards percentage is mentioned in front of every coin. Like, if we stake (Kava), it will provide 20% yearly rewards whereas if we Stake USD, it will provide only 2% yearly rewards.

So, there are different coins which we can stake on Kraken with a very simple way. It's upto us which coin we like or in which we can hold for long time.

2) Poloniex

Polonies is a known cryptocurrency exchange that offers no or very low transaction fees. The platform was founded in 2013 and allows you to trade a variety of cryptocurrencies. To learn about staking on Poloniex follow this link https://support.poloniex.com/hc/en-us/articles/360047911334-Staking-on-Poloniex

Poloniex provides you freedom to deposit, trade and withdraw any time with highly competitive returns as there is no lockup period for your assets.

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So, for Staking, you have to follow the steps mentioned in the screenshot which are:

  1. Buy and deposit assets in your account
  2. Hold these assets during each balance snapshot
  3. We can earn rewards by these holdings

Poloniex offers a number of staking options you can choose according to your requirements. Like as seen in the screenshot below that many coins are fee free for staking with not too much requirements. We can start staking TRON with minimum of 100 TRON with 0 fee whereas, if we stake ATOM then there is 25% Staking fee.

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Comparison between Kraken and Poloniex:

Kraken

Poloniex 

It offers more staking options

It offers fewer staking options

Offers yearly rewards

Offers daily as well as bi-weekly rewards

best for long-terms rewarding system

best for instant rewards

There is no fee for staking

25% staking fee in some coins

Although poloniex is an easy-to-use and user-friendly platform, in my view Kraken is a more profitable staking platform due to offering more options. A user can also stake more than one crypto for greater earnings. And the staking rewards are displayed so that a user can decide beforehand.

Moreover, there is no staking fee on kraken but on poloniex, there is 25% staking fee in some coins. Kraken offers yearly rewards whereas Poloniex offers daily or biweekly rewards but with fewer staking options.

What is Impermanent Loss?

A staker is often at risk of a temporary loss due to the volatility of cryptocurrency. It happens when there is a difference in funds in the AMM and the funds in your wallet.

For example, if you were contributing to the liquidity of a platform and the rate of the assets changes from their value when you deposited them, you are most likely to face an impermanent loss. The loss is equal to the difference in this value.

To make it simpler for you, we can say it is like when a currency falls in value after you buy it. So at the time of withdrawal, you will less than how much you paid.

What is Delegated Proof of Stake (DPoS)?

Delegated proof of stake is an advanced form of proof of stake consensus mechanism. A consensus mechanism decides how a new block will be created on a blockchain or how a transaction will be verified. 

In the proof of stake mechanism, validation of a new block is decided based on the coin's stake. In a delegated proof of stake system, the holders can delegate their rights to a third party. These third-party members can vote to add new members to secure the network. These can also be called witnesses, and they take part in building consensus for adding new blocks. The voting power is again dependent on the coins a stake-holder has.

Conclusion

Staking is a beneficial way of earning passive income through cryptocurrency. The impermanent losses are temporary and are often covered by transaction fees. Staking in more than one asset can bear more profits than staking your coins in a single platform.

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Hi @salmanwains. Thank you for participating in Season 3 of the Steemit Crypto Academy.

I congratulate you for doing a good job and demonstrating mastery of the topics requested in the assignment.

I look forward to continuing to correct your next assignments.

Rating: 8.5

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