What is Staking?

Staking is the backbone of Proof of Stake(PoS) cryptocurrencies. It involves holding funds in a cryptocurrency wallet to support the security and operations of the blockchain network.

PoS is the consensus mechanism that Cardano and other PoS coins work off of. It is more energy efficient than Proof of Work(PoW) coins such as Bitcoin and Ethereum. Where in PoW coins, miners compete to solve complex algorithms, with the winner being awarded the ability to mine the next block on the chain. In PoS systems, the protocol randomly chooses from the stake pools the next block miner. The chances of being chosen are proportional to the amount of coins that pool has staked. The more coins staked, the higher chance of mining a block.

So instead of competing with computing power for the ability to mine the next block, staking pools are rewarded with producing the next block in correlation to the amount of stake they have. When you stake to a pool, your coins are added to the total stake of that pool, increasing the pool’s chances of being rewarded with producing a block. At certain intervals, as determined by the protocol, rewards are then distributed to the pools based on the number of blocks they mined. The “stakers” of the pool then share in these rewards in proportion to the amount of coins they have staked relative to the size of the pool.

The staking pool is nothing more than a group of coin holders who combine their resources to increase their chances of validating blocks and receiving rewards. When you stake to a pool on the Cardano($ADA) network, the coins never leave your wallet. They are assigned to that pool, but you are free to withdraw your coins, spend your coins, or delegate your coins to another stake pool at anytime.

The stake pool operators(SPOs), maintain the nodes on the network, and handle all of the technical stuff associated with running a stake pool. To securely and efficiently run the pool, Southeast Staking [SES] operates several nodes, has numerous security protocol measures in place, and continuously monitors the node’s performance.

Proof of Stake coins, such as Cardano, allows people to easily participate in the governance and consensus of the blockchain. It is also an easy way to earn passive income on your crypto. Staking with Southeast Staking can earn you between 4-6% return on your Cardano annually.

If you have any questions, or want more information on staking with Cardano, we can be found on Twitter, Facebook, Telegram and Instagram.