What is Staking?
Simply put, staking can be compared to a savings account. When you put money in a savings account, a bank uses it for lending to other people and pays you some percentage as a reward. Similarly to this, when you stake coins, you lock them in your wallet in order to stake to a Validator’s staking pool to validate block transactions. Typically, you earn rewards for the help.
What is Proof-of-Stake (PoS)?
There are three main mechanisms that help blockchain reach consensus: Proof-of-Work (POW), Proof-of-Stake (PoS) and Delegated Proof-of-Stake (DPoS).
Proof-of-Work mechanism is used in Bitcoin and is deeply linked to mining. Bitcoin transactions are gathered into blocks and linked together to form a blockchain. Miners compete in solving a complex mathematical problem and whoever solves the problem is granted with a reward and can add another block to the blockchain.
In Proof-of-Stake mechanism, the coins of the participants are locked (staked) and the protocol randomly chooses one of them to validate the block. In this case, the more coins are staked, the higher the probability to be chosen by the protocol is.
The Delegated Proof-of-Stake is similar to PoS, but in this case, your coins are considered as votes and you can vote for delegates that will ensure the security of a blockchain.The rewards are then spread among the delegates and they distribute them among the voters.
What are the benefits of staking?
- Rewards. It’s a way for you to earn interest on your crypto holdings
- Simplicity. You don’t need to have any profound skills or equipment. If you decide to try out NEAR staking, just follow the guide below.
- Ecosystem support. It’s a good chance for you to help the ecosystem maintain its scalability and become part of the community.
- Sustainability. PoS is more environmentally-friendly than PoW, with NEAR Procol having been awarded the Climate Neutral Product Label.
Things to consider when staking
Staking is a useful tool, however, there are also factors that should be always taken into consideration before trying it:
- Market. Staking reward APY is deeply linked to the price of the coin you hold. Be mindful of the crypto volatility, DYOR.
- Validators. Choose your validators carefully. If your validator misbehaves, there is a chance you might lose your rewards or funds. There are also validators that take huge commissions.
How to stake NEAR
On the Near Wallet home page, open the “Staking” tab:
First, if you have more than one account, you need to select the one from which you will stake NEAR, then you need to choose the validator to whom you are going to delegate tokens. Click “Stake My Tokens” to continue.
On the new page, start entering the validator’s name, for example, p2p, or choose it from the list manually, and then click “Select”. The wallet will show the validator’s fee.
Pay attention to the fact that Near uses non-standard addresses in the p2p.pool.near format instead of long hexadecimal words, like Bitcoin and Ethereum addresses!
After that, click “Stake with validator” to delegate coins.
Specify the amount of NEAR tokens you want to delegate. Select the “Use Max” option to stake all available tokens in your wallet. Finally, click “Submit stake” to confirm the transaction.
Then you confirm your action once again in the pop-up.
And wait a few seconds for verification of the transaction.
If the coins are staked successfully, you will see this message:
Return to the dashboard. The amount of staked tokens, the reward from staking, the amount of the NEAR tokens available for withdrawal and the validator you’ve delegated to will be displayed there. Besides, you can choose one or more different validators.
Attention! Earned tokens are automatically reinvested, but you can unstake.
To unstake, please go to the Staking page and scroll down to find your current validators. Press one you would like to unstake.
Press “Unstake” to choose how much you would like to withdraw.
Enter an amount of tokens you want to unstake. Select the “Use Max” option to unstake all tokens delegated to the validator. And press the “Unstake Tokens” button.
Success page will appear after confirmation.
Tokens will be unstaked after 4 full epochs, which is approximately 52-65 hours. Then you can withdraw as soon as the “Withdrawal“ button is available.
*An epoch is an interval of time that consists of several consensus rounds. Note that there is no guarantee of the exact number of consensus rounds. Currently, one epoch lasts for about the duration of half a day.