Stacking cryptocurrencies. Types. Pros and cons.

Stacking cryptocurrencies. Types. Pros and cons.

Algorithm of Proof of Ownership

All blockchains have one thing in common - transactions must be verified. Bitcoin, for example, does this through mining and the Proof-of-Work algorithm. But there are other forms of verification. Proof-of-Stake (PoS) is one consensus mechanism that can have different variations and hybrid models. It is the first technology to incorporate a betting system into blockchain. Coin allocation gives currency holders some power on the network. By allocating coins, you get to vote and earn income. It's very similar to interest for keeping money in a bank account or giving it to a bank to invest.

Benefits

  1. One of the main advantages of coin placement is that it eliminates the need to constantly buy expensive equipment and consume energy.
  2. The system offers a guaranteed profit and a predictable source of income, unlike the performance verification system, where the reward is through a random process with low probability.
  3. The value of your supplied coins does not depreciate unlike ASICs and other mining equipment, and can only depend on fluctuations in current market prices.
  4. Since the advent of PoS, hundreds of blockchains have adopted this consensus, hence users have quite a wide choice for stacking.

What is stacking

Stacking is holding a certain amount of coins in your account for a specific time period. Roughly speaking, you lock your assets and let the blockchain use them to build its ecosystem. In exchange, you get a certain percentage that goes to your income, as long as the cryptocurrency market remains stable. Or you keep your savings from inflation by increasing their amount while they lose value. Staking also comes in several types.

  1. Coins on Balance. Users can claim rewards simply by storing their coins in their wallets for a certain period of time. The amount of the reward is determined by the protocol depending on the size of the blocked deposit and is delivered directly to the user's wallet account via a chain of transactions.
  2. Delegation. Users delegate a portion of their share to a validator, who will be responsible for network security. Remuneration is also transferred from the validator, who will share part of their income with those who delegate their share to them. This reward can either be automatically applied by the protocol or depend on the good will of the validator.
  3. Launching a supernode. Users can start their node and become validators. Validators are rewarded directly according to their total rate, incentivizing nodes to validate the network based on return on investment.

Cryptocurrencies for stacking

 

NAV (NavCoin) 

NavCoin is an open-source blockchain with its own cryptocurrency. At the end of 2018, NavCoin added a highly sought-after feature - cold betting. This means that you can easily and securely bet your coins directly from a cold wallet. The advantage of this method is security, as the wallet does not have to be connected to the internet 24/7.

NavCoin offers 5% p.a., and the most profitable resource for buying currency is the Binance trading platform.

NEO

NEO is an open-source smart contract coin that runs on a modified type of Proof of Stake blockchain. By holding NEO in a compatible wallet, you get a GAS token in return, which supports the network and is used to pay for transactions.

 

VeChain


VeChain is another cryptocurrency platform similar to NEO that provides smart transactions. VeChain built its blockchain on the Proof of Authority algorithm, which is similar to Proof of Stake but has a different consensus model. 

You can place a VTHO token at 2 to 6% APR, and you can buy it through Binance and Kucoin.

PIVX

PIVX is an offshoot of DASH. It is also a privacy-oriented, open-source blockchain. 

The deposit yield is 5-8% per annum. The coin is listed on the Binance exchange.

ARK 

The ARK blockchain features high transaction speeds and fast connectivity to other blockchains, thanks to "smart bridge" technology. Blockchain attempts to solve scalability problems by using 8-second blocks. Because of these features, ARK carries weight in the cryptocurrency community. 

ARK offers a 10% APR and is available on Binance, Bit-Z and OKEx.

Lisk

Lisk aims to simplify the use of blockchain for enterprises, developers, and startup projects. Lisk is a blockchain based on dAPPs that makes it easy to create decentralized applications on its platform. With Lisk, you can create side chains, each with its own unique functions. 

Lisk can be invested at 4% APR and bought through Binance, Bit-Z, OKEx, Kucoin.

Neblio 

Neblio is a cryptocurrency project focused on enterprise use. It allows companies to create their own decentralized applications and blockchains. Neblio also plans to add smart contract features in the future.

With NEBL token you can easily bet coins and get up to 11% per year, which is pretty good for passive income. You can add this token to your portfolio on Binance and Kucoin.

ONT

Blockchain is focused on corporate users. In particular, they are designed to support other blockchains in the government and business segments.

ONT, created by a strong team, you can buy through Binance, Kucoin, OKEx and Bit-Z. And you can place the token at 5% p.a.

Komodo 

Komodo is another platform that makes it easy for users to create their own complete blockchain solutions. They also offer services such as a decentralized exchange and a decentralized ICO crowdfunding platform.

At the heart of it all is the KMD coin available on Binance. The token can be used for staking at 5% per annum.

If you have decided to get seriously into stacking, you should learn about the services that allow this method of earning income. These include popular cryptocurrency exchanges:

  • Binance;
  • Poloniex; 
  • Huobi; 
  • OKEX; 
  • Coinbase.

And purses:

  • BitBay; 
  • Ledger Nano; 
  • Trust Wallet; 
  • Trezor; 
  • Math Wallet; 
  • ChainX Wallet и т.д.

Of course, these are not all currencies and wallets that support stacking, but you have to understand that not all of them are equally profitable and compatible. So choose carefully so you don't burn through your investment decisions.

Stacking: pros and cons

Pros: 

  1. Passive source of income, which is much easier than mining.
  2. No need for additional equipment (the exception is hardware storage, but their use is not necessary).
  3. The deposit does not lose value over time.
  4. Large selection of cryptocurrency resources.
  5. It is possible to bet on many coins simultaneously.
  6. There is no limit on the size of the bets.

Cons:

  1. Currency volatility can result in the loss of all assets and dividends.
  2. Coins are not available for use during the betting period

As you can see - stacking is a profitable, simple and convenient way to increase the balance of your cryptocurrency portfolio. But, like all crypto mechanisms, it carries a significant risk, which is not relevant for everyone.

Summary

Before you get carried away with stacking, there are some important points to consider. First, you must remember that you have to lock your coins when you bet. Consequently, you can't work with them - trade or pay for services. Also, choose your stacking currency carefully - there's no point in investing in crypto that won't be worth anything in the near future. The value of your assets can both rise and fall in value during stacking. This can have its benefits, as you will get more coins the lower their market value. But going forward, always choose cryptocurrencies that are already firmly established in their niche and have no intention of losing it.

Related Articles

EOS cryptocurrency
EOS cryptocurrency
Article posted8/30/2022Article categoryCryptocurrency
Learn more