30-oct-2022

Greetings dear read dot users

This is the second part of yesterday's article, Misconceptions about crypto staking. If you haven't read the first part, please take sometime and read it because may be you won't understand this part unless you read the first part. Well, let's start with the misconceptions. Indulge with me as this article is going to be a lengthy one.

Misconceptions #1

Staking rates are implausibly high.

How is that Dot, for example, offers stake payouts in the range of 13%? That can't be real, or it would not last long. I mean, no. You can see that the yearly inflation rate of Dot is around 10% by looking at the figures. There is thus, plenty of Dot to distribute.

Staking cryptocurrency protects your holding from being diluted by an increase in the total amount of tokens. After all, releasing more coins dilutes the market value of every existing currency.

Consider the agreement you make to stake crypto currency as a trade in which you and the network benefit. Your contributions to the network's safety ensure the safety of your tokens value inside the eco system.

Finding the right time to stake requires researching the tokens inflation rate and comparing it to the yield from staking.

Misconceptions #2

You must have alot of money to bet

In Etherum the bare minimum for operating a validator and staking is 32 Ether. This is a significant investment, and maintaining an Ethereum validator is not a walk in the park either. The process calls for a robust network connection and specialized gear. The same may also be said for other chains to a lesser or more significant extent (see below).

Most people will outsource this task via s staking as a service platform or an exchange. Your wallet will be linked to the staking pool via these third parties. With specific cryptocurrencies, like Cardano, you may use your funds to choose a staking pool.

Misconceptions #3

Staking requires alot of skill

There are various access points for staking crypto currency, just as there are different storage options for crypto currency, each with its trade-offs between convenience and safety. Using a cryptocurrency exchange or staking as a service platform may offload most of the work involved in these scenerios.

A few places to start staking cryptocurrency are:

• Through a wallet: link your current hardware wallet or web wallet to a staking as a service provider or staking pool.

• Using a crypto currency exchange: the exchange takes care of the technical aspects

• Establishing oneself as a validator

Being validator is the "hardcore", less popular Staking, requiring knowledge and specialized equipment.

Among those three possibilities the first two are much more typical. Having a wallet and using a staking as a service platform, which has the expertise and hardware to act as a validator on its customers behalf, could not be simpler.

Staking cryptocurrency on an exchange works the same way. In doing so, your money will be added to a larger pool for staking. Coins for staking may be deposited through trades, including coinbase, kraken, and Binance. Naturally, both the staking as a service provider and the exchange will take a cut.

Misconception #4

Staking is the same between cryptocurrencies

ETH 2.0 (pre merge), Cardano, ADA holders and Polkadot are some of the most valuable proof of stake Blockchains.

Let's examine the stakes and dynamics to understand the various methods.

Regarding Cardano, ADA holders put their coins into staking pools. It does not need someone to actively participate in the network by operating a node is using specialized gear. Earnings on stakes are 6% annualized.

In polkadot, validators are nominators are treated differently. The nominators are responsible for making sure the validators act appropriately. To validate transactions, operators need to set up a cloud server running Linux to operate a node. Staking DOT does not require any special software or hardware, and there is no minimum amount that a nominator must own. The annual percentage yield (APY) for staking is 13%.

Network incentives, a percentage of daily transaction costs, are also a part of the staking rewards in Etherum 2.0. The total quantity of ETH invested determines the prizes. As more ether is staked, the rate of return decreases. The current payoff for staking is roughly 5%.

Misconception #5

Yields are steady and constant

To begin, each procedure has some leeway in setting the pace at which rewards are earned. Take Solana's stake dilution structure as an example. Because of this, the amount of SOL tokens pledges in exchanges for incentives is proportional to the proportion of the entire supply that has been staked.

Furthermore, validators impose a variable fee on transactions. This may cause certain pools prizes to be smaller than others, depending on your preferences. A staking yield calculator is available for Cardano, which you can use to estimate your potential returns check out the potential annual percentage yield, considering the fee to the staking pool provider.

The stakes pools quality is another important consideration. An option in several protocols is to penalise invalid validators that are either unavailable or contain fraudulent transactions. Cuts like those are known as slashes. If you trust your crypto currency to one of these validators, you risk having some or all of it stolen. Before committing, you should look over staking pools reputation.

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That's all for today; I don't want to make this article longer, but there are still many things I need to discuss. But it's all right. In tomorrow's article, I will go over them. Lastly, don't forget to read every part, especially if you are interested in cryptocurrencies, as I think it will dispel most of your doubts and misconceptions.

Thank you for taking sometime and reading it, coments are highly encouraged

Stay blessed stay safe

-KatinessEverdeen