The Staking Pool Guide: What you need to know

Bitcoin, as you know, is part of the first generation of cryptocurrency. This is what brought about the great paradigm shift that we are experiencing.

It was the first decentralized blockchain product. However, it failed to solve the power consumption problem that many people criticize. And, rightly so, eh. We all know that bitcoin mining is expensive in environmental terms…

This is why the fact that "Proof-of-work" is gradually being replaced by "Proof-of-stak" appears so beneficial for everyone.

No need to purchase specific type equipment ASIC, no need to pay crazy electricity costs, etc.

It is no coincidence that more and more people are turning to staking. And, a bit like consensus mining pools working with proof of work, well, there are now staking pools with the same concept in fact.

😯 Anyway, I'm certainly repeating myself because I tend to be very cheerful when I talk about stake.

So, there you go, we're going to focus on the staking pool today.

Staking Pools: what exactly are they?

Have you ever wondered what coins you put into pools to get better winnings? Well you can, and that is why in this article we will focus on staking pools.

Staking pools aim to get the most out of the staking process. It works similarly to pooling mines that are available for POW coins.

How staking pools work:

Staking pools aim to make the most of the combined staking capacity. Generally, the larger the staking pool, the more likely the staking pool will be selected and verify a block.

The PoS algorithm aims to solve the power consumption problem in part. It does this by assigning mining power to a portion of the coins held by a miner. This way, rather than applying energy to answer mathematical PoW puzzles, PoS miners will mine a percentage of the transactions.

Let's take an example to make it clearer.

Person A:

This is a staking wallet with 1000 ADA coins. He doesn't want to bet his coins and just wants to do it solo.

Now, when a block needs to be mined, the blockchain attempts to find the most suitable staking wallet to do so. In this case, there is little chance that Person A's wallet will be chosen to validate the block.

Person B:

Person B understands staking. He participates in the staking pool by contributing the number of his coins. As the value of the staking pool is much higher than other wallets/pools, there is a high chance that it will be rewarded for resolving a pool. For example, the pool has over 1 million ADA. This increases the chances of being chosen for block verification.

By participating in the staking pool, person B has a greater chance of earning more profit. The reward is distributed among each participant in the pool. The staking pool service may take a certain percentage of the reward as a service fee. That’s normal, you might say.

Should you opt for a staking pool?

Well, it entirely depends on your needs. If you already have a good number of staking coins in your wallet, it may not be a good idea to participate in a staking pool directly.

However, if you have a low coin count, betting is your best bet to earn more profits.

What are the concrete advantages?

A majority of blockchains operating on PoS will allow you to stake coins independently. Often, however, this will not allow you to get the most out of a crypto…. Your staking must maintain its connection to the network 24/24. That's already problematic, you might say.

Even the slightest connection break can disrupt your income potential… This is why many people opt for staking pools, to benefit from these many advantages:

You are always connected. Staking or (a masternode) generally requires a server with a high-speed connection to the Internet. There are many people who don't want to deal with the intricacies of setting up and maintaining a server. Otherwise, these people are not able to take care of it. However, some live in areas where internet services and even electricity are unreliable. There are countries with very frequent power cuts, for example.
No technical problems to deal with. Staking pools take all the hassle out of staking by handling the technical details. They can be run on their own hardware or with a virtual private service provider. Regardless, these pools ensure that the pools are always functional.
Income is more stable and better predictable. With pools, rewards are more regular and you can have a better overview of what you will earn. The larger the size of the staking pool, the greater the chances of creating a block. As a result, rewards fall at a more frequent and more constant rate.

What are the risks of joining a staking pool?

Of course, there are benefits, that's for sure. But, like everything else, that doesn't prevent there from being risks.

In fact, as with many sites related to cryptocurrencies, we are not yet sure of the reliability of the sites. There were still one or two sites which closed recently like StakeUnited...

You must therefore choose the best sites and staking pool from the start. Because we are not safe from hacks and scams, including complete server crashes...Classic, you might say.

Here are some of the most well-known risks:

The system was not built by professionals, but by enthusiasts. Basically, they are not professional enough to make it a profitable business.
Transparency is lacking. It is quite rare that you see information about the identity of operators and their pasts. Without this information, it is very difficult to establish a sense of trust, so it can be risky.
There is uncertainty regarding the regulations. Only now are regulators beginning to use appropriate jurisdictions. Besides, we are still at the very beginning… It is still difficult to know whether or not staking pools are on the radar of regulators.

Particularity of certain staking:

There are several ways to stake. Some projects run internally and others run multi-blockchain. For example, internal staking is used by Decred.

It is a hybrid blockchain, specifically PoW and PoS. Decred powers a decentralized cryptocurrency. PoW miners treat a cryptographic algorithm as a way to add a block to the database. Likewise, they use it to generate up to 30 newly minted Decred Coins. Three of these coins help fund the development of Decred and 18 go to the miner. The remaining nine go to the “stakeholders” who were responsible for voting to add the block. The stakeholders are therefore those who stake and keep their decred.

In this system, stakeholders lock up a portion of their Decred coins to obtain a “ticket”. This is representative of the right to vote. Stakeholders who are eligible to vote will receive their share of the overall reward and a refund of the ticket price.

In parallel with the internet staking system, we therefore have multi-blockchains which are the most widespread.

These services will allow you to join any pool for the majority of PoS blockchain projects even if you own few tokens.

These platforms are largely blockchain specific. Additionally, they vary depending on how each project builds the general structure of its PoS system.

What staking pools can you join?

Staking pools are specific to different cryptos, and that's why there isn't just one staking pool you can use.

Far from there. And, there will always be more even as time goes by and the participants increase.

First of all, you must confirm that you have purchased POS tokens. In general, you will find specific tutorials for staking on these tokens there. No worries there.

The StakingLab platform

This is a reliable and efficient German staking pool. This platform supports novices who are just starting out with staking. It is different from other pools in that it describes how it lists its service's blockchain.

Regarding staking pools, there is a 3% fee that you must pay for the rewards you acquire. Additionally, there is a 0,1% fee on all withdrawals. Masternodes typically pay a 5% fee, however, there are absolutely no withdrawal fees.

In addition to all this, StakingLab provides users with something called “InstantNode”. This allows you to join a masternode pool in the same way as joining a PoS pool. Your rewards arrive once you make your deposit and you can withdraw at any time.

With this in mind, the flexibility of this system does not come free. There is a 3% deposit fee, 0,2% withdrawal fee, and 7,5% fee on each reward. The referral program belonging to this system scales as you convince more people to join StakingLab.

This remains an excellent site for staking simply and profitably.

The SimplePoSPool platform

This platform consists of a fully automated system that simplifies the pooling of staking and masternodes. Moreover, it is one of the oldest on the market.

There are many projects for staking but mainly for Masternodes, I must specify.

Read to find out more: Staking vs Masternode: What is the difference?

As of this year, the service fee is 3% (last year it was 1%).

MyContainer: The simplest site

You can also use sites like MyContainer in which you will have a wide choice of cryptos to store. Without the technical configuration to do yourself, in addition. This is really the simple version of staking and the one I use personally.

The site takes commissions which you can abolish by taking out a subscription. In fact, you will have 100% of your profits.

Go to MyContainer

Everstake: the site with several possibilities

Bon Everstake is a slightly more difficult site to use and not really recommended for beginners as it requires a bit more work up front. That said Everstake is a very good platform for those who want to stake more profitably.