Q) What does staking mean?
- Staking in cryptocurrency refers to the process of holding onto and actively supporting the network of a particular blockchain by locking up some of your coins as collateral. By doing so, you earn rewards in the form of newly minted coins or a share of transaction fees in exchange for helping to secure the network.
Q) Where do people stake?
- You can stake on chain or off chain using any centralized service like binance, coinbase, kraken etc ✅
On Feb 9, Brian Armstrong (CEO of coinbase) reported a rumor that SEC will likely crack down on staking.🙄
This morning it was reported that Kraken agreed to shut down its cryptocurrency staking service and pay $30 million in penalties to settle U.S 😱.
So it is starting!
Now, how does it effect the altcoin markets and why we should NOT take this lightly? 👇
A staking ban will result in disruptions to the operations of the blockchain network, as the network would no longer have enough validators to function properly. 👎
Reduced security for the network, as there would be fewer validators to secure it. 🙃
Increased centralization, as the validation of blocks would be performed by a smaller group of individuals or organizations.
Many altcoins and crypto projects heavily depend on staking and the crypto markets are already showing the effects of this decision🔻