What is Staking?
Staking is a process of holding a cryptocurrency or token as a way to support the operations of a blockchain network. It involves locking up a certain amount of tokens for a period of time to participate in the process of validating transactions, adding new blocks to the chain, and maintaining the security and integrity of the network.
In return for staking, users may receive rewards in the form of additional tokens issued by the network. In Parallelchain Mainnet, Staking is used in delegated proof-of-stake (DPoS) consensus algorithms, where validators are chosen based on the number of tokens they have staked, rather than the computational power they can provide, as in proof-of-work (PoW) algorithms.
Elements inside a staking process include:
- Pool: a group of validators and delegators who combine their staking resources to increase their chances of being chosen to validate blocks and earn rewards.
- Stake: the cryptocurrency tokens that a participant locks up as collateral to become a validator or delegator.
- Deposit: the locked balance used to determine the amount of stake that can be contributed to a pool.