What is Proof-of-Stake and how to make money on it?

There are many blockchains currently in existence, and they all require user participation toconsensus building. Every blockchain in the world works with some kind of consensus mechanism. One such consensus mechanism is Proof-of-Stake.

On a blockchain using Proof of Work, the rewardis received by the one who has completed the work of validating the block, and on the Proof of Stake – someone who has invested in the network. The more coins a user holds in their account, the higher their investment in the network and the higher their chances of becoming the next block validator.

Staking is the placement of digital assets in a wallet that supports this feature. Based on the number of coins on the balance, the user receives interest or rewards.

To start participating in staking, you needchoose a coin, accumulate enough to bet, and find yourself a pool. If a coin has a high entry barrier (requires a large amount to start staking), you can form a pool with other holders. Setting up such pools is quite complicated.  

Working with staking services does not requirespecial skills. The pool provides all the statistics about the bet made and the share of the reward, and its technical support can help if questions arise. 

There is also cold staking, which allows you to work on a hardware wallet, that is, without an Internet connection. However, this option is more suitable for large holders.

Staking is very different from regular mining,used with the Proof of Work algorithm. PoS, instead of using expensive equipment and large amounts of electricity to verify transactions and blocks on the network, uses the user's money to create blocks and support the system. Among the disadvantages of staking are blocking coins in the wallet and the inability to spend them.

Many consider staking to be one of the mostviable passive income options. Some cryptanalysts and experts believe that the Ethereum 2.0 update will completely change the field of decentralized finance and trigger a bull run in the price of ETH.