EOS, Tezos (XTZ), Proof of Stake (PoS)–In a surprising turn of events for crypto-related news, popular financial outlet Bloomberg is featuring a piece on the benefits of staking coins through bear market conditions, a process familiar to investors of PoS currencies.
Proof of Stake, which forms the basis for several top cryptocurrencies like EOS, Cardano (ADA) and Tezos (XTZ), provides a way for current investors willing to hold their coins in wallets (i.e. not on exchange) to reap the benefits in the form of regular token payouts. According to Bloomberg, this method of earning coins while going long through the bear market is just one way to combat the severity of recent price movement.
Rather than Proof of Work (PoW) mining, which rewards users for turning computing resources into hashing power in the form of freshly minted coins–a process utilized by Bitcoin, Ethereum and other high profile currencies–PoS payouts are based upon the staked amount users hold in their wallets. For a coin like Cardano, which will reportedly be implementing its long-awaited PoS feature, having more ADA in a staked wallet will correspond to a greater dividend.
Most investors in these projects view staking less as a way to generate income or interest, as one could imagine from holding dividend-yielding stocks, but rather as an incentive to prompt users to improve the cryptocurrency network.
The effect is two fold. Not only do staked wallets lend computing power to their coin’s network, similar in concept to Bitcoin and other mining currencies, but it also keeps a greater percentage of coins in wallets and off exchanges. Theoretically, a greater proportion of coins devoted to staking reduces circulating supply in the market and improves the ecosystem of the currency, as opposed to being continuously wagered in price speculation.
The amount of payout received from staking varies by coin, with the Bloomberg piece citing a range from 5 percent to 15...