Proof-of-Stake is an algorithmic structure that aims to create distributed consensus with less power and real asset infrastructure. The goal of staking is to allow completely verifiable transactions and trusted exchange just as proof-of-work normally would but on a more efficient basis. Instead of purchasing and powering cryptographic solving hardware, people would certify themselves to stake by buying a certain number of tokens as a “stake” in the particular blockchain they underpin.
Currently, there are two types of staking:
• Wallet Staking: This is the most common type of staking. Wallet Staking only requires that tokens are kept in the user’s wallet address. Some projects require that the user’s wallet remain open and connected to the internet (to perform minor functions on the blockchain), others mint rewards automatically as part of the particular platform’s sustainability model.
• Node(s) Staking: Often called Super Nodes or Master Nodes, the function of “Nodes” is to provide compute and bandwidth resources to perform more complex functions on the blockchain, effectively speeding up and increasing the security on the respective platform. “Nodes” have the potential to provide the infrastructure to deliver the broadest range of real-world applications to the world. Node Staking is the most profitable staking method, however buy-in is high and the infrastructure setup is technically challenging.
With the state of current marketplace, there is an opportunity to acquire tokens on an optimal dollar cost average as well as taking a larger “stake” not only within a certain project but within the staking marketplace overall. Furthermore, the more nodes you run allows for more voting power on important project matters. Some may be wary of the potential downward pressure to come and choose against the risk. However, given the derivative tools available at most exchange platforms, spot exposure can be completely counteracted at a low cost by short sales or futures. As most information and systems in the world are moving into the virtual realm, and as the world is becoming more bi-product aware, the attractiveness of staking becomes clear.