I'm staking Tezos. It's cool. My Tezos are magically making more Tezos.
In my Trust Wallet (along with a buncha other wallets and exchanges, likewise), I don't even have to do anything except designate my # of Tezos, hit "stake" and then, sit back and collect interest...which is great, because honestly, I have no freaking idea what it is exactly I'm actually even doing.
After making up explanations (is like banking interest! or "when one Tezo loves another Tezo v v much…"), I figured it's time I learned something.
What TF is staking, anyway?
Simply put, staking is the act of locking cryptocurrencies to receive rewards.
https://academy.binance.com/blockchain/what-is-staking
The locked crypto is used to support blockchain transactions that utilize Proof of Stake (POS) consensus algorithms.
The Proof Of Stake algorithm uses a pseudo-random election process to select a node to be the validator of the next block, based on a combination of factors that could include the staking age, randomization, and the node’s wealth.
https://academy.binance.com/blockchain/proof-of-stake-explained
This means, when you lock your coins -- Tezos or some other POS-based coin (ATOM, TRON, NEO, etc.) -- it (probably) groups up with other locked Tezos (in a staking pool) to form a node (however, your coins could also just be in their own node, depending on how many you stake)*.
Usually, the more coins, the more power.
Random chance determines which node gets to create and validate the next block -- as opposed to Proof of Work mining, where hardware competes in a race to solve hash computations.
You lock coins, essentially, to do the blockchain work. You're mining, without the rig and energy expenditure. You mine by hodling.
The "interest" I'm seeing isn't interest at all. It's a staking reward. How much depends on how many staked coins and a buncha other factors that make it smell an awful lot like an interest rate, but whatever. Rewards.
You get rewards because when you lock your coins, they're...locked. You can't touch 'em. You can unlock them -- they're still yours! and keep any reward earned to that date. But, depending on the where and who and how, it could take time to unlock, or have some limit somewhere**.
* This explanation is high level correct for Tezos, but if you wanna get granular, and I know you do, staking loans, or delegates, those Tezos to someone who has decided to be a "baker."
Bakers create the block. If any Tezo in the block gets chosen to create, or "bake" a block, the baker's node does the baking. They put up the Tezos delegated to them as a "bond" and a new block gets born (awwww!).
All the Tezo owners in the block get rewarded, but the baker gets more...and they have the right to vote on Tezos business.
** read things, for the love of cheese, before you put money in it. Please. For me. As a personal favor. K?
And that's staking. Did I get to the heart of it? (UGH, sorry, low hanging fruit vampire jokes are irresistible)
