After learning about the kinds of blockchains and fork, it is time to learn a new term in cryptocurrency trading. The Proof of Sake (PoS) has become very popular recently. To be exact, the S of PoS, Staking, is hot. But do you know anything about it? What does stake has anything to do with cryptocurrency?
Stake literally means ‘to have an interest’. In other words, it refers to the ‘hold’ of cryptocurrency. So the PoS becomes the target of the block creator with just what it has. In this case, cryptocurrency can be received as block-generating compensation. But there are inconveniences such as having to keep the computer on.
To address this inconvenience, DPoS (Directed Proof of Stock) has emerged. DPoS refers to individual cryptocurrency holders delegating the right to vote on node selection to a specific person and receiving compensation for it.
From where the service operates, it is good to be able to participate in the network operation through delegated shares, and from where the steaming person can earn profits without a separate PoS process.
Why this cryptocurrency stake is getting hotter
In addition, the reason why the recent stake is drawing attention is due to DeFi. As the dope began to gain attention, it naturally turned to the interest of the stake. The reason is simple. This is because it takes a stake to use the DeFi service like a bank’s collateral.
Users can deposit the cryptocurrency in the service and borrow the cryptocurrency as collateral. Although the cryptocurrency that can be borrowed varies depending on where the service is provided, it is generally possible to borrow from other types of cryptocurrency as well as from deposited cryptocurrency.
Naturally, one can earn interest just by depositing without taking out a loan. It is obvious that the stake is expanding beyond the simple use of blockchain’s method of proving its stake to the entire financial ecosystem.
