Staking Pool

A staking pool is formed by several people joining their cryptocurrencies in staking. The aim of this practice is to increase the staking power of the single individuals, i.e. the probability of being chosen for block validation in Proof-of-Stake (PoS) networks and, consequently, to earn rewards. In the PoS consensus mechanism, the validators are chosen in proportion to the amount of tokens they stake, so the larger the stake of a person or entity, the more likely they are to be selected to add new blocks to the blockchain. Nodes that validate blocks also receive rewards in the form of cryptocurrencies, so the more cryptocurrencies a staking pool contains, the more rewards it will earn because it will be called upon more often to act as a validator. 

A staking pool consists of all the assets of the people who joined the pool, and the rewards are redistributed among the participants. In terms of locking the assets, the rule is the same as in the classic staking – when you lock your cryptocurrencies in the pool, you can no longer use them until you remove them from the staking pool or the staking period expires. 

There are both decentralised and centralised staking pools. Decentralised staking pools are typical of centralised exchanges, where users earn rewards for staking their cryptocurrencies and the total stake of all the users is used by the validators. Decentralised staking pools, on the other hand, are very common on DeFi protocols or platforms. In this case, the staking is carried out through a smart contract. 

Correlated words

Metaverse

Digital platform in which users take part in shared experiences, immersed in an online virtual environment, sometimes based on blockchain

Delegated Proof-of-Stake

A variant of Proof-of-Stake in which the stake is transferred to delegates who act as validators. 

Pure Proof-of-Stake

It is a type of Proof-of-Stake in which validators are chosen randomly and anonymously thanks to the VRF function.

Liquid Proof-of-Stake

Proof-of-Stake variant in which tokens are not staked but liquid.

Stake

Total amount of cryptocurrency being staked

Cold Staking

Type of staking that requires the use of a cold wallet

Blockchain

A technology based on cryptography that enables decentralised and uncensored execution of any type of transaction.

Proof-of-Stake

A consensus mechanism based on putting cryptocurrencies at stake in order to contribute to the blockchain.

Genesis Block

This is the first block of a blockchain, sometimes referred to as block 0.

Block Height

The number of blocks in a blockchain starting from the genesis block.

Network

The set of interconnected computers, called nodes, on which the blockchain of a given cryptocurrency is based.

Transactions per second (TPS)

Literally 'transactions per second', it is a measure of the speed of a blockchain.

Transaction

Exchange of value, property or data between two parties.

Shard

Fragments' of blockchain operating in parallel.

Proof-of-Work

A consensus mechanism based on computational power to contribute to the blockchain.

Node

Device connected to a blockchain and participating in its network.

Off-chain

Transaction that is not performed on the blockchain.

On-chain

Any process performed on the blockchain.

Mining Pool

A company that bases its business on mining, by collecting a large number of powerful mining devices.

Mining

The process of adding new blocks to the blockchain and creating new bitcoins by miners.

Consensus Mechanism

A decentralised way to validate transactions on blockchain.

Hash

A cryptographic function that serves to identify each block of the blockchain.

Governance

In the cryptocurrency sector, it indicates the way and rules by which projects and blockchains are governed.

Fee

Commission paid for the execution of transactions.

Double Spending

The possibility for an attacker to spend the same amount twice if the payment system does not have a mechanism to prevent this.

DoS

A Denial of Service is a computer attack that aims to make a network or service inaccessible.

DLT

Distributed Ledger Technologies are technologies based on an immutable ledger of transactions, the control of which is distributed.

Decentralised

It is said of a system governed by the consensus of its participants and without a central authority or hierarchy.

Cold Wallet

Wallets that are not connected to the internet.

Bridge

In blockchain technology, it is a connection that allows interaction between different blockchains.

Financial Bubble

Increase in the value of an asset, in an excessive way, given its intrinsic value.

Block Explorer

It allows you to consult any transaction made on a blockchain online

Block

The set of encrypted transactions that, connected to other blocks, makes up a blockchain.

ASIC

Devices dedicated to mining certain cryptocurrencies.

Interoperability

The ability to exchange data with other platforms, including those based on different types of blockchain, as well as with the off-chain world.

51% Attack

When a node or group of nodes attempts to take control of the blockchain.

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