Staking 101 :
How to Choose the Right Validator and Identify the Pros and Cons of Crypto Investment!
What Is a Validator in Blockchain?
Think of it as a big electronic notebook where people enter their payment transactions, for example, buying things like regular grocery shopping.
However, to prevent some practices that we might not like, there must be someone who can verify those transactions.
So Validators work basically as persons that confirm that actions have been performeis, that is the payment, and to make sure that the rules have been adhered to. After getting the verification, the information is then recorded in the notebook for record keeping.
How To Choose A Reliable Validator And Stake?
Select the best validators you can find
well it will be best to go buy the book and just find the best validators their is
selecting a dependable person who will assist in maintaining order at the in charge of a trusted service. You want to employ a person who is responsible and does his/her job as planned.
Becoming a member
While this may be an optional case, it will prove effective.
In addition, teaming up with other groups, when you stake in a pool, it increases the chances of earning rewards. However, as a general rule, the greater the number of participants, the lesser your share of the reward will be.
Stake your tokens
Think of staking similarly to opening up a savings account. You deposit your money, and you earn some interest over time. Staking is also similar in the sense that when you lock your cryptocurrency with a validator, you receive some share of the rewards if the validator helps verify the transactions.
why you should stake
You could earn Passive Income with this which is the most attractive part of staking. Just like the interest from a savings account, just locking tokens in is paid back at a later time. Easy cash for low work!
when you stake you also support the System Staking is akin to making sure the blockchain mechanism works fine and is not always under threat. In the same way, it is important to keep the supply of the internet intact.
In addition, being a Part of the Community staking demonstrates that you are considering the growth of the whole system and not just your part of it.
4. Advantages and Disadvantages
It is always normal practice to start with the
Advantages
You are able to earn Money While you sleep, which of course goes without question, is the first and most important advantage. Making passive income by earning interest on your tokens since just holding them as staked tokens earns you rewards.
Support the blockchain. It goes without saying that supporting the entire network and boosting its security and trust. Long-Term Gains. This is probably the most known benefit - Staking is a good way for glory-seeking crypto investors.
Disadvantages
This is somewhat of a priority for some investors to withdraw their tokens at a certain time. If the need does arise, the funds locked in staking will be very hard to access. Also, there is the risk of losing some tokens. This might occur if the validator makes mistakes and your stake decreases. Fees. Well, there are validators, and every validator has a little of what he gains, so these costs cut into the profit you can gain