Simple Explanation of Staking

Staking refers to the act of locking a certain amount of cryptocurrency you hold into the network. The locked cryptocurrency contributes to blockchain validation and helps maintain network security.

And you can generate profits by receiving cryptocurrency rewards based on this contribution.

First Method: Direct Staking

To stake, you need to install a node on your computer and operate it 24/7 while validating block generation. You can participate directly in the blockchain network without going through others, but the hassle of installing nodes makes staking difficult for general investors. Additionally, when there’s a minimum staking amount (Ethereum: 32 ETH), accessibility can be limited for small individual investors.

Second Method: Using Cryptocurrency Exchanges

This is the method Bake provides. Through exchanges, you can use your cryptocurrency in the proof-of-stake process. You delegate proof-of-stake to validators and receive the generated rewards as profits. Since exchanges handle management tasks and find nodes to participate, general investors can also earn profits through staking.

Bake’s Staking Service

Bake has created an intermediary service within the complex staking process so that general users can easily participate in staking. Start staking in just 3 seconds with Bake.

These are the advantages of staking.

The advantage of staking is that you can earn cryptocurrency rewards just by leaving it there, like a bank deposit. As the total amount of staked cryptocurrency increases, the market supply decreases, which helps with price stabilization. Since staking means that investors have the intention to hold the coin long-term, it also has the effect of enhancing the safety and security of the blockchain.

Please be careful about these points when staking.

The disadvantage of staking is that immediate unstaking (withdrawal) is not possible. While Bake allows unstaking requests at any time, there’s a waiting period for unstaking that varies by currency. Simply put, if you have a desired timing, you need to calculate the unstaking waiting period and submit an unstaking request accordingly. Therefore, if the currency value drops sharply during staking, quick response may be difficult.

Curious about other content? Please refer to the materials below

How do staking profits occur?