Staking with GCS Token

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What is Crypto Staking?

Crypto staking is the process of devoting your cryptocurrencies to aid a blockchain network and validate transactions. Staking offers crypto holders a way to earn passive income without them needing to sell their crypto assets as the staked are rewarded with cryptocurrencies in return for providing support to the blockchain network. Even if you are looking to earn passive income from staking your cryptos, let’s dive deeper to understand how it works.

How does crypto Staking work?

Only certain cryptocurrencies allow staking, such as the GCS token. If the cryptocurrency allows staking, hence you can “stake” a portion of your crypto holdings and earn a percentage-rate reward over time in the form of the cryptocurrency itself. This mainly occurs via a “staking pool” which is identical to an interest-bearing savings account.

Your staked cryptos are able to earn rewards because the blockchain puts them to work. Cryptocurrencies that allow staking utilizes a “Consensus Mechanism” process called “Proof of Stake”, which is a way the blockchain network ensures that all transactions are verified and secured without needing to rely on a middleman. Hence, your staked crypto becomes part of the process.

“Proof of Stake” mechanism

Cryptocurrencies are mainly decentralized, which means that there is no central authority that is controlling or governing the system. Therefore, they utilize a “consensus mechanism”- Proof Of Stake.

Proof of Stake is a new consensus mechanism with the idea of enhancing speed and efficiency while lowering fees. One of the key factors on how proof of stake is able to reduce costs is by not requiring miners or computers to churn through mathematical problems, which is a time and energy-consuming procedure. Instead, transactions are validated by people who invested within the blockchain network through staking.

“Proof of Stake” and “Proof of Work”

Many cryptocurrencies, such as Bitcoin and Ethereum, uses a consensus mechanism called “Proof of Work”. This process requires a large amount of processing power at solving mathematical problems such as validating transactions between strangers in different parts of the globe and making sure that no one tries to spend the same money twice. Part of this process involves “miners” all over the globe competing to be the first to solve a cryptographic puzzle. The winner then earns the right to add the latest “block” of verified transactions on the blockchain network, therefore receiving some cryptocurrencies in return.

In the context of “Proof of Stake”, staking cryptocurrencies acts similarly to mining, as it is the process where a network participant gets selected to add the latest batch of transactions to the blockchain and earn some cryptocurrencies in exchange of the service.

Different implementations may vary from project to projects, however, it still goes down to a crypto holder putting a portion of their crypto assets in the network for a chance to add a new block onto the blockchain in exchange for a reward. The staked tokens act as a guarantee of the legitimacy of new transactions they add to the blockchain network.

The network chooses validators based on the size of their stake and the length of time they’ve held the crypto. Hence, the participants that has invested the most are rewarded. If the transactions in a new block are discovered to be invalid, users can have a certain amount of their stake burned by the network, in what is known as a slashing event.

Advantages of Staking

Long-term crypto holders view staking as a way of allowing their assets to work for them by generating rewards, rather than having their value in their crypto wallet to be determined by the market’s performance.

Stacking has the added benefit of contributing to the security and efficiency of the blockchain projects that you support, such as the GCS token. By staking some of your crypto assets, you make the blockchain network more resistant to attacks and strengthen its ability to process transactions.