• 10 Sep, 2021

Stake System and PoS

The term “stake” has recently become a popular investment option in the crypto world. Many tokens on the market are stackable, and many new projects are evolving to integrate the staking system into itself in some way. So what is staking? In brief, we can say that it is the process of keeping your cryptocurrency holdings locked in your wallet for a certain period of time without spending or transferring them to support the operations of a cryptocurrency chain. The investor earns a certain amount of reward cryptocurrency from these cryptocurrencies during the period of locking. It will continue to be a popular system as long as it provides profit to its investors.

Although it is only known as an award-winning method in the eyes of its investors, the stake system is extremely useful for the market at many points. It is especially useful against the energy problem faced by the crypto market and the price fluctuations that investors are most affected by. Thanks to the Proof of Stake (PoS) mechanism, large amounts of processing power are prevented from being wasted, and thanks to keeping a large number of tokens that need to be circulated in the market locked in staking wallets, it can resist the great selling pressures that occur during the sudden fluctuations of the crypto market, preventing its investor from having a large amount of loss.

The mechanism called Proof of Stake (PoS) is basically a system that allows mining of a cryptocurrency at the rate of the cryptocurrency held in the wallet. The PoS system allows the miner to make more or less mining depending on the amount of crypto money in the wallet. This system was created as an alternative to the Proof of Work (PoW) mining method. PoW is a system that causes high electricity consumption by expensive devices and is called mining in the market. PoW is a proof method known to be harmful to nature due to its high cost and energy use. Users perform these operations by constantly running devices specifically produced for mining. In the PoS system, on the other hand, the transactions required for crypto money transfers are not performed by devices and electrical power as in PoW mining, but by allocating a processing power depending on the cryptocurrency locked in the wallets. This resulting cost reduction also makes the stake system more attractive.

Considering the general condition of the crypto market, dozens of tokens that investors trust have turned into projects that provide high returns thanks to stake systems.