Staking - centralization risk

Staking - centralization risk

By Tradelize | Tradelize | 8 Mar 2020

This week, the news about Steemit drew particular attention. Let's look at what's happening from the other side. This whole situation is indirectly reminiscent of how the board of directors fired Steve Jobs. At the meeting, they voted against the company's founder and ideologist and left him aside. That's what Justin Sun did to the Steemit network. Once again, the brutal business world has proven itself in the crypto market.

Take staking, for example, we've all heard about it from different stock exchanges. It's a good idea to store coins and also extra income. The investor hands over his coins for blockchain service, in return, he receives a reward in the form of new coins. It is not necessary to deal with the installation of the essential node and other complex nuances for the standard inhabitant. It seems that there is nothing wrong with that.

Portfolio cryptocurrecies which are received as a reward

Source: Tradelize

In the picture above, you can see that most of the coins from the portfolio are coins, which are received as a reward for keeping personal funds in the wallets of the exchange.

Exchanges present staking as a passive type of earnings with a low entrance threshold. Indeed, this is not a bad strategy for the long term. Plus, getting interest from staking is an excellent tool for hedging during market falls. And as practice shows, shitcoins hostages find very positive aspects of this. Most cryptocurrencies are highly depreciated today. Therefore, staking is a good option for investors to get at least some benefit.

In the competition between crypto exchanges for liquidity, staking has become an excellent method for attracting investments. And there seems to be nothing wrong with it either. But it is only a beautiful wrapper, which business uses to obtain not only economic benefits but also as possible leverage. Businesses can take advantage of any situation. And so, it happened, decentralization again suffered and those who firmly believe in it. Because of the passive position of the average holders, business destroys the principles of decentralization and takes advantage of their laziness. By collecting enough coins on their wallets, the exchange becomes a major player in the world of Proof-of-Steak at the expense of unsuspecting customers.

Proof-of-Steak has a high level of security and is resistant to attack 51%, but now it seems its main drawback. With the arrival of business, the idyll of crypto evangelism was broken. And it's not the businessmen who are to blame, they want to make money, and they find opportunities for it. The guilt should be shared by passive average crypto holders, who allow them to use their coins. And we see where that can lead.

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