Does anyone stake their crypto?
- Thread starter tcpnomad
- Start date
koffea
Explorer
Every coin I hold that supports staking, I stake it.
Crypto isn't something I need on a daily basis, so if there's a lock-up period, I'm fine with waiting. As far as I can tell, there's no real drawback for me.
Plus, I'm earning at least a small amount of interest.
Crypto isn't something I need on a daily basis, so if there's a lock-up period, I'm fine with waiting. As far as I can tell, there's no real drawback for me.
Plus, I'm earning at least a small amount of interest.
koffea
Explorer
The main danger is that the market could tank while your coins are locked up for staking. You won't be able to sell them quickly, and if a coin's value drops, the rewards you earn from staking won't be enough to offset that loss.
Other issues I know about aren't unique to staking—for instance, relying on a 3rd party node always carries a small amount of risk. Keeping funds in custodial accounts instead of moving them to your own wallet also comes with risks. So these aren't staking-specific problems, but they can still impact those who stake.
koffea
Explorer
my bad, I didn't catch the whole question earlier
1) from a theoretical standpoint, staking brings stability to the network by helping keep prices steady, which stops huge drops. that means it promotes long-term incentives
2) it lines up incentives via validators, since they've got money on the line too, making sure the system operates properly while their funds are staked.
3) it makes a 51% attack harder by acting like a poison pill. with a staked coin, an attacker would need 51% of the network's wealth. that alone makes the attack too costly, because as you buy up, the price shoots up, but if you reach 51%, honest nodes will trigger slashing protocols to seize the coins. in contrast, for non-staked coins, a 51% attack is just a matter of compute power.
there are likely more reasons, but those are three major ones.
there's a fourth one, and I feel it's often overlooked. in privacy coins, the ability to stake while staying completely anonymous is a huge plus. it lets black marketeers stake parts of their wallet while laundering other parts. so they stop losing money to inflation.
1) from a theoretical standpoint, staking brings stability to the network by helping keep prices steady, which stops huge drops. that means it promotes long-term incentives
2) it lines up incentives via validators, since they've got money on the line too, making sure the system operates properly while their funds are staked.
3) it makes a 51% attack harder by acting like a poison pill. with a staked coin, an attacker would need 51% of the network's wealth. that alone makes the attack too costly, because as you buy up, the price shoots up, but if you reach 51%, honest nodes will trigger slashing protocols to seize the coins. in contrast, for non-staked coins, a 51% attack is just a matter of compute power.
there are likely more reasons, but those are three major ones.
there's a fourth one, and I feel it's often overlooked. in privacy coins, the ability to stake while staying completely anonymous is a huge plus. it lets black marketeers stake parts of their wallet while laundering other parts. so they stop losing money to inflation.
As for how those tokens get used, there's no single answer. Certain projects treat staking as a mechanism to pull tokens out of circulation, which is supposed to make the price rise. Rewards for stakers can then come from network fees or other income sources. But there's a catch: when the reward paid to stakers is the very token they've locked up, that introduces sell pressure. The result can be that you're earning 5-10% APY on the amount you staked, while the token's price has dropped 30-40% since you started staking.
koffea
Explorer
unfortunately Monero has no staking support
my guess is that this will ultimately cause its decline
still, at present, it remains practically the sole option taken at the main hubs