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How does staking work?
The process of "staking" starts by buying a certain number of tokens/coins in the network.
After the purchase is completed, the user now has to lock the holdings by following the procedure indicated by the developers of each particular network.
In most cases, a staking transaction can be performed in a few minutes by following your wallet’s instructions.
On the other hand, cryptocurrency exchanges have facilitated the process of staking tokens by introducing features such as staking pools.
These aim to increase the compensation obtained from staking the tokens of a certain network by upping the number of coins staked at a given point in time.
In most cases, the higher the number of staked coins, the higher the number of transactions a given node will be assigned to validate.
Nodes are ranked, in most cases, based on the number of tokens/coins they hold.
As a result, the nodes that hold the largest number of tokens/coins will often receive higher compensation,
which is the reason why staking pools have become so popular these days.
On the other hand, a user can stake tokens/coins for a certain period – known as fixed staking.
Some providers are also offering the possibility of entering a more flexible scheme
in which the user can withdraw their tokens/coins at any given point – known as flexible staking.
Benefits and risks of staking crypto
Crypto staking has grown in popularity lately due to the attractive rewards crypto holders receive from this activity.
At the moment this is written, interest rates offered by staking can go from 6% per year offered by well-reputed networks
like ethereum (ETH) and Cardano (ADA) to as much as 100% offered by smaller networks, for example, PancakeSwap (CAKE) and Kava (KAVA).
Old STAKING Plan