Definition of staking
Staking is the act of securing the network operations of a blockchain by holding funds in a crypto wallet. By immobilizing your cryptocurrencies in a smart contract, you can benefit from rewards.
The concept of staking is similar to that of mining (see article on mining).
Indeed, these two means reward their users since they participate in the decentralization of a network by securing it.
What are the benefits of staking?
Staking has many advantages.
Indeed, it allows you to work your assets by earning rewards.
In addition, staking contributes to the security of a blockchain network, making it more resistant to potential hackers.
What are the risks of staking?
Staking is also subject to many risks
Despite the advantages that staking can present, it is also subject to many risks.
Staking locks your cryptocurrency for a period. As a matter of fact, this requires a so-called “locking” period during which no transfer is possible.
In addition, the price of your currency can collapse at any time. It is a very fluctuating market, so it can represent a risk.
Then, being digitized, it is more easily accessible to hackers, so it is important to remain very vigilant despite the security measures in place.
Finally, it is possible that the gains may take some time to arrive. This can be a nuisance for some users.