What is Staking?
“Proof of Stake” refers to a method or process that is used to establish consensus, validate transactions, and create new tokens. For this purpose, compared to the well-known proof-of-work blockchains (Bitcoin and Ethereum), the computing power of the validators is not used to perform transactions. Instead, validator nodes are created by depositing a set amount of coins or tokens depending on the blockchain. The owner of the node then becomes the validator and can check and confirm transactions that have been made.
As a positive incentive, validators receive a share of the incurred (transcation) fees as a reward for performing successful validations. However, for added security, validators are also penalized for incorrect behavior by a partial withdrawal of their cryptocurrencies. This misbehavior already includes, for example, an interrupted connection to the network. Therefore, as an individual, it is somewhat challenging to become a Validator on your own, as a stable and secure infrastructure is necessary. In addition, depending on the blockchain network, it is necessary to deposit a (relatively) high minimum amount and to guarantee long blocking periods. That is why staking is often done in delegated in large pools (Delegated PoS). Participants can already deposit smaller quantities in these pools so that the minimum amount and the required infrastructure can be guaranteed. Participants will then receive a pro-rated reward from the Rewards for the entire pool. On stakingrewards you get an overview of the biggest proof-of-stake blockchains with the average rewards and the percentage of coins that are already staked.
Staking at DeFiChain
DeFiChain also uses the proof-of-stake mechanism. To operate a masternode, a validator must first provision and lock 20,000 DFIs (priced at approximately $2.60 per DFI). Such a masternode is then responsible for validating transactions. In the future, however, it is planned to steadily lower the minimum number via community votes in order to be able to provide a higher decentralization and number of masternodes. To simplify the operation of masternodes, DefiChain offers a step-by-step guide for the desktop version.
A special feature of DeFiChain is a close connection to Bitcoin’s blockchain. Every 60 validated blocks (about 30 minutes), DeFiChain’s blockchain is entered into the Bitcoin blockchain using Merkle Root. The respective validator of this operation receives an additional reward for this. According to stakingrewards, a total of approximately 30% of all DFI is allocated to staking, which is currently worth $466 million. Furthermore, 91,000 users are involved in staking.
How can I stake my DFI at DeFiChain?
We have checked the market for you, for us currently three options make the most sense (without sorting). 1. set up your own master node. 2. use of the service of CakeDeFi. 3. staking via dfx.swiss. Due to the current price of DFI, it is sometimes difficult for private individuals to create such a masternode and participate in staking. Therefore, there is an option to have the staking done by others who receive a fee for setting up and running the masternode.
Staking services for amounts under 20,000 DFI
An alternative solution is to participate in the network via a pool of CakeDeFi. Here the possibility is offered to be able to participate also already with small amounts starting from 1 DFI in the Staking. In the so-called Freezer of CakeDeFi, DFI can be created for staking at different terms of 1,3,6,12,24,36,60 and 120 months. The higher the maturity, the higher the average return. For the investment over 1 month, the return is about 40% per year, and for a long-term deposit of 60 or 120 months, it increases to 63% and 92%, respectively. According to CakeDeFi’s own statistics, a total of approximately 48 million DFIs are currently deployed for staking, more than half of which are for the full 120-month term.
Another provider is dfx.swiss, which also offers a staking service. On a positive note, they offer these services not only for residential customers but also for business customers! Furthermore, they offer the possibility to invest directly with EUR, CHF or USD into the Staking, without the need to invest in a first step e.g. in a second step. DFI to buy. This can offer advantages, especially with regard to tax.
Staking services for contributions of 20,000 DFI or more
Another interesting option is offered by mydeficha.in. If you have 20,000 DFI (or more), mydefichain supports you to run a fullnode. Especially for people who are less intensively concerned with technical details, this has advantages! For example, one must not set up your own Linux server and worry about permanent availability (stability, internet connection, etc.). In addition, mydeficha.in offers support via the Telegram channel as well as via email.
Do you know of any other providers that we should include in our overview? Then feel free to send us a message or join the DeFiChain Telegram community. We look forward to seeing you!