Crypto Academy / Season 3 / Week 1 - Homework Post for professor @imagen
INTRODUCTION
My fellow steemians,
It is with great joy and happiness in my heart that I write on this amazing topic in the week 1 of season 3 of the crypto academy program organised by the steemitblog. Having attended the lecture delivered by our own dear noble professor in the person of @imagen on the topic STAKING I will be presenting my homework task below based on my little understanding about the said topic. I recommend that you read till the end as you may want to add or correct or even learn a little from what I have to offer. Let's get started.
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. (Binace is not allowed)
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Staking can be define as the process of storing or keeping an asset within a network with the sole purpose earning a reward at the end. We can attribute staking to be a fixed deposit account where you have no complete control of your finance once you deposit it. Take for instance, if I engage in a fixed deposit account and I signed my deposit to be for 2 years, I won't have access to this money until after that two years and same goes with staking.
Reward generated during staking solely depends on two things that is the amount of asset been staked and how long will the asset be locked up. To earn a higher reward a user needs to stake a bigger amount of asset and also be able to live the asset to last for a long period of time in the staked platform.
Staking can be categorized as centralized staking and decentralized staking. Let's talk about the one after the other.
Centralized staking is a type of staking that is handled by third-party platform. This third-party platform allows users to stake their assets in pools of blockchain that are available on the platform. It is important to state here that the third-party platform handles all the technical process hence the user does not need to bother his brain as to how the technical process is been carried out.
There are basically two types of centralized staking namely
1. Staking-as-a-service
2. Exchange Staking
Staking-as-a-service
When talking about staking as a service, it is a type of staking that involves a third-party platform in which they platform offers their services to their users in exchange for staking their assets in the said platform. It is also important to mention here that the technical process is handled by the platform it self so a user does not need to stress his or her brain to do any analysis. The fees charge here by the platform is based on the percentage of stake.
Example of Staking-as-a-service platform are as follows:-
- Staked
- Staking Lab
- MyContainer
- Figment Networks
- Stakewith.us etc.
Exchange Staking
This type of staking is carried out by big staking platforms to users who are whales or have a high portfolio in the crypto world. In this type of staking, the asset of a user is not completely locked because they user can trade his or her asset it any time convenient for him. It is also important to mention here that the technical process is handled by the platform it self so a user does not need to stress his or her brain to do any analysis.
Example of exchange staking platform are as follows:-
- Kraken
- KuCoin
- Coinbase
- Poloniex
- Binance etc.
Decentralized Staking
This is a type of staking that allows user to stake any type of their asset in the various decentralized applications available in the blockchain. This type of staking involves the non-custodial platforms such as trust wallets and others. Staking in a decentralized staking platform like trust wallet is sometimes not too safe but the reward or the profit gained in this type of platform is higher when compared to that which is earned in the centralized staking platform.
Comparism between Two Exchange Platforms
This question requires that I explain based on my understanding two different exchange platform and also compare and then say which is better and more profitable. In line with the explanation I have made above, I will be selecting one platform from staking-as-a-service and one also from exchange staking. Now let's start.
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MyContainer (staking-as-a-service)
This is an online staking platform that give room to it users to stake their various asset. This platform is unique because the offer 0% fees in some of their stake able tokens and their reward to is very attractive. In other words they offer up to 100% reward to some of their users as well. One of the most amazing thing about this platform is that they provide their users with statistical data analysis which enable the users to know the direction of crypto at that point in time and also helps them with the knowledge they need about staking.
Staking on MyCointainer platform
They steps below are a quick guide to use the MyContainer platform to stake your asset.
- Visit the MyComputer website
- Create an account
- Buy or Transfer your asset
- Stake your asset
- Stay and Earn reward
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Poloniex (Exchange Staking)
This is an online platform that is used to stake different digital asset. It is also use to buy and sell all form of crypto currency. One unique feature of Poloniex as a staking platform is that it is very safe. Users do not need to be sacred as regarding loss of their asset since a lot of verification is done before an asset is moved from one wallet to the other and verse versa. Poloniex platform is founded in the year 2013.
Staking on Poloniex platform
- Visit Poloniex website
- Create an account
- Buy or deposit your asset
- Stake your asset
- Stay and Earn reward
NOTE:
- In MyContainer platform, asset are locked up completely but in the case of Poloniex you can still have access to your asset and trade with it at will.
- Trading in MyContainer is only possible when the asset has stayed it's due time in the stake but in the case of Poloniex your asset can be traded at any time.
- No technical process is involved in both as the platform performs all the technical analysis.
In conclusion, I want to say that after reviewing the both platform I recommend Poloniex platform to MyContainer platform. Poloniex platform has many advantages over MyContainer platform. Example when we talk about safety, Poloniex is more safe than MyContainer and also Poloniex is more flexible when compared to MyContainer as a platform because you can sit trade your asset at any given point in time.
What is Impermanent Loss?
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When we talk about Impermanent loss, we simply mean that the asset you initially deposited in your exchange platform is now less. In other words, when your initial deposit drops and the current asset is lower than the amount you deposited that scenario is known as Impermanent loss. Take for instance you bought your asset at the rate of 100USD and as time passes the asset amount drops to 70USD, that is a typical example of Impermanent loss. We all trade for one reason and that is to make a profit, but when ever your trade and then instead of making profit you make a lost, it is believed that you are experiencing Impermanent loss. Mostly this Impermanent loss is caused by false market generated by either short term buy or sell.
What is Delegated Proof of Stake (DPoS)?
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Delegated Proof of Stake (DPoS) is a process or an avenue where the users of a particular blockchain select among their selves some users who will be part of making a decision concerning transaction within the platform. Example of such decision is choosing the next block, etc. Now this selected users are those who have higher influence in the blockchain, that is those who are known as whales in the crypto currency world. It is important to state here that the process used in DPoS is entirely gotten from PoS.
Difference between Proof of Stake(PoS) and Delegated Proof of Stake (DPoS)
As I earlier stated that the process used in DPoS is entirely gotten from PoS, but despite this very fact, there are still some other notable differences between DPoS and PoS. This differences are listed below.
- In DPoS, transaction is very secured because of the security feature inconcated in the platform whereas that of PoS is less secured and the platform is expose to attack by hackers.
- The transaction performed in DPoS is very fast since it's a one way something but that of PoS is a little slow. For instance if you perform same transaction in DPoS and in PoS, that of DPoS may take a minutes or even seconds to be completed but that of PoS may take some minutes to complete.
- In DPoS, delegates are responsible for performing the blocks whereas in the case of PoS it's not like that.
Conclusion
Finally, from my little study and few research, I want to conclude that staking is actually a very cool way of making money. They beauty of it all is that you don't need a technical knowledge to perform this operation. But it is also important to have it in mind that despite the fact that you stake to earn reward or profit you can also have a lost which is known as Impermanent loss. To me, I believe staking is a very easy way to make money but even at that, you can still experience a lost. I want to say a very big thank you to the professor @imagen for this wonderful lecture and I do hope to learn more from you shortly.
Hi @simonnwigwe. Thank you for participating in Season 3 of the Steemit Crypto Academy.
You made a great effort and demonstrate mastery of the topics requested in the assignment, however, you do not present the cryptocurrency offerings with their corresponding APY and/or APR rates offered by both platforms to know which one is more profitable in terms of returns on staked funds.
I look forward to continuing to correct your next assignments.
Rating: 6.0
Thanks prof.