Sphere

The crypto space as we know it is filled with endless opportunities, and Sphere is still on the journey dedicated to bringing those opportunities to investors by exposing them to quality projects.2 months ago, we launched our token ‘$SXS’ and we plan to give it as much utility as possible.Just recently, we announced our token-burning feature and now we want to add even more utility through a concept known as staking. So how will staking benefit you? Read on to find out.What is staking?Staking is a procedure where holders of a certain cryptocurrency coin or token, lock up their tokens for a certain period of time in order to earn rewards. Staking is a way crypto holders can make profits without having to sell the cryptocurrency they believe in.If you are familiar with the banking and finance system, staking is similar to depositing your money in a high-yield savings account.The banks lend out your deposited asset and you earn annual interest. In crypto, this model has many benefits other than just earning interest, such as voting power, securing the network, and many others. You will get to know all these in full detail later in this article.How does staking work?Staking is possible through a consensus mechanism known as proof of stake. Consensus mechanisms are the backbones of cryptocurrencies that make them work. They allow nodes to reach an agreement on the state of the cryptocurrency network.A popular consensus mechanism is proof of stake. The Proof of Stake consensus mechanism is a way blockchain nodes reach an agreement. Validators are asked to lock up or “stake” their tokens to validate transactions. If a validator tries to manipulate the network, he stands the risk of losing his staked tokens.For example, the minimum stake for ETH validators is 32 ETH which is currently worth $58,592 as of the time of writing. A validator can lose all this money if he tries to validate false transactions.You might ask, why would a validator want to risk losing this amount of money? This is because if he validates transactions correctly, he stands to gain rewards worth more than his stake by receiving incentives for his contribution to help secure the blockchain network.The bigger his stake, the higher his chances of getting chosen to validate transactions and earn more crypto tokens.Interested people who don’t have plenty of crypto tokens to stake can join staking pools. A staking pool is a collection of cryptocurrency holders who pool their coins to increase their chances of being picked as validators.Why do projects roll out staking features?Crypto projects enable token staking for a number of reasons. Some include;Liquidity ProvisionAside from securing a blockchain network, staking also serves as a means of providing liquidity to a crypto project. You stake the token of your preferred crypto project for a period of time and the project uses your tokens to run their operations. In return, you get an APY on your stake.Your staking reward usually depends on how much you stake and how long you lock up your tokens.Tier AccessAnother reason why projects enable token staking is to give the token holders more value. They can do this by enabling tier access to holders.This way, people who stake large token amounts can be sure that they are getting the full value of their stake. The tier access feature is mostly common with crypto launchpads.Why should I stake my crypto?Here are reasons why someone can decide to stake his crypto tokens;No need to sell your coinsSelling your tokens is a popular way to make profits in the crypto ecosystem. You buy a token at a certain price and sell when it’s higher. But with staking, you can earn rewards without selling your tokens. It is not unusual to see staking APYs of up to 11% or higher.Passive incomeIf you don’t want to sell a token you feel is going to perform well in the long run, staking is a way to put your money to work for you. This is a win-win situation in contrast to leaving your tokens in your crypto wallet where it stays dormant.Little effort requiredWhen it comes to staking, it is one of the easiest ways to earn in the crypto industry. You just buy the token, stake, and that’s it.You do not need any technical skills or have to learn about protocol narratives and arbitrage techniques. Stake, and watch your rewards start rolling in.Voting powerSome crypto projects use staking as a way to give their token holders a chance to partake in the project’s activities through voting. The larger your stake, the higher your voting power.This gives investors the ability to participate in important decision-making that can impact the future of the project they believe in.Are there any risks attached to staking?Although staking is a great way to earn rewards, it still has some risks attached to it, which include;Inability to access your tokens for tradingWhen you stake your tokens, you are locking them up in the smart contract for a period of time. During this time, you might not have access to it. This limits your ability to cash out if there is a huge price drop during your staking period.Although some projects allow you to unstake anytime, the condition is that you lose all your staking rewards if you unstake before the selected period of time.Token price volatilityThe value of the token you stake can fluctuate, which means that the value of the staked cryptocurrency can decrease, resulting in a loss. Staking is more profitable for those who do it for the long term. As the token price of quality projects increases over time.Technical riskStaking requires you to keep your tokens locked in a protocol for a long period of time. Technical failures, such as software bugs, can result in the loss of staked coins.How are staking rewards paid?Staking rewards are paid in the crypto project’s native token. So if you stake ETH, you get rewarded in ETH tokens. This can be a bonus to your rewards if the token sees a great positive uptrend within your staking period.Please note that staking in crypto has the potential of yielding amazing returns but profits are not guaranteed.$SXS StakingStaking of $SXS is something the team at Sphere has been working on for a while, and this will add more utility to the token. Stakers of $SXS will be able to earn rewards and also have the chance to vote on changes that will affect Sphere in the future.Staking will come in 3 tiers and 7 pools.Essentially, the higher your stake, the higher your interest. Staking will also dramatically increase your chances of being whitelisted in IDOs and even guaranteed in some cases, depending on which tier you choose.When staking?Staking will be live in a short while. For now, keep your eyes on our social media channels, and wait for our announcement.Want to be a better investor? Have a look at our <a href="https://spheresxs.medium.com/the-secret-of-the-successful-investor-due-diligence-9475ece27dde" rel="noopener noreferrer nofollow">article on due diligence</a>.

Make profits without selling; the concept of staking

SphereSXS

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