• Market Cap
    $948.150B 2.24%
  • POW Market Cap
    $775.758B 1.88%
  • POS Market Cap
    $36.030B 5.01%
  • Masternodes Market Cap
    $2.001B 5.84%

Binance Research: There Has Been a Significant Rise in Staking

By Lorenzo - 2019-10-29

The newest Binance research article focuses on cryptocurrency staking, a unique feature offered in the cryptocurrency industry that rewards users for holding funds instead of spending them.
According to Binance, staking is trying to mimic the traditional incentive mechanisms used in conventional products and companies. The Binance Academy defines the Proof of Stake algorithm as:
The Proof Of Stake algorithm uses a pseudo-random election process to select a node to be the validator of the next block, based on a combination of factors that could include the staking age, randomization, and the node’s wealth.
The article states that there are five main PoS protocols adopted by different blockchain projects. The classic Proof of Stake consensus algorithm, the modified DPoS (Delegated Proof of Stake) used by EOS, a distribution model used by Stellar, the dual-coin system used by NEO and Masternodes.
According to the report, the cumulative market capitalization of the top 10 cryptocurrencies support staking is around $25.8 billion, Ethereum being top 1. The report also mentions the highest yielding projects like Synthetix with a 61.9% return or Livepeer with a whopping 102.7%.
However, Binance research also mentioned that while a high yield can be very lucrative for users, it doesn’t necessarily mean it’s the best when you take into consideration the risks, restrictions and other obligations.
For instance, some projects will require users to manually claim the rewards, Komodo caps the rewards for users that haven’t done this in one month. Additionally, users can be rewarded with other rights aside from monetary incentives, for example, access to voting.
While most PoS cryptocurrencies allow users to withdraw and unfreeze their assets freely, others might impose tighter restrictions. This is something that users really have to take in count, however, the most important factor is the security risk.
According to Binance, the staking ecosystem is still fairly new and will continue to grow in the future. The launch of Ethereum’s PoS will most likely take a substantial portion of the holder’s attention. Staking provides a new type of investment opportunity for users of all economic backgrounds. Staking allows users to generate passive income and should provide them with even more options in the near future.