Staking explained

Staking is a yield-generating mechanism that allows you to earn passive income over time (i.e yield) without having to sell your cryptocurrency.

This is achieved by essentially ‘putting your coins to work’ - i.e staking coins - in various CeFi and DeFi projects, where they can participate in processes known as Proof of Stake, Liquidity Mining, Yield Farming and more.

Proof of stake is a ‘consensus mechanism’ used by cryptocurrencies to ensure that all transactions on a blockchain are secured and verified without the need of a middle-man such as a bank or centralized payment processor.

Liquidity mining is a way of providing liquidity to DeFi protocols, and in exchange for the provided liquidity, users are awarded with fees generated from the pair they provide liquidity on.

Yield farming is based on automated market makers (AMMs). AMMs are smart contracts that facilitate the trading of digital assets using algorithms.

At its core, staking is essentially the cryptocurrency equivalent of allocating funds into a high-yield savings account in a bank, but with much higher yields on average.

Learn more about staking and the Advantages of staking on Margex