Steemit Crypto Academy | Season 3: Week 1 Assignment|| Staking

Introduction

Hello everyone, I am grateful for the rare privilege to learn and earn again and after going through the course presented by professor @imagen, I must say it was worth the time dedicated to research and learning. I will go straight to answering the home work task given by this professor for the week, but just before I begin I feel it will be great to begin with describing what the concept of staking is.

[Image from @imagen]

Staking

There are so many projects on the blockchain and everyone is definitely free to choose which one best suits their needs and which one they need to seriously buy into. The process of staking started with the Proof of Stake consensus mechanism where users stake tokens in other to get a chance to validate blocks on the blockchain and get rewarded for validating the blocks.

The idea of staking could be compared to having your funds in a fixed deposit account when using a traditional bank, they also produce some rewards but the method of staking on cryptocurrency is higher than what we can ever get from a traditional bank. With staking, users/nodes that stake up to the minimum requirement for validation of block get to earn staking reward.

Research and choose 2 platforms where you can do staking, explain them, compare them and indicate which one is more profitable according to your own opinion.

COINBASE.

Coinbase is a major exchange platform that chooses to reward users whenever they stake their tokens on the platform. Coinbase came about this idea because it wanted users to stay around the platform even during the periods when the prices of tokens aren’t too great. Coinbase boasts of been the first major exchange that allows every US customer to participate in staking their crypto assets because initially some exchanges only provided the wealthy investors with the option of staking their coins.

Advantages of staking on Coinbase.

• Coinbase offers a great amount of security to its users, working with a 2FA authentication method is a great security skill that coin base uses to help users keep their coins safe.

• Coinbase comes with an extremely user friendly interface, almost anyone can easily go around and understand how to use it.

• Coinbase comes with a feature for alerts, it makes it easy for users to know whenever there is a rise or drop in the value of their tokens.
• Coinbase provides an easy to navigate feature for users who want to send as well as receive cryptocurrencies.

Downsides of staking on Coinbase.

• The sad part is that not every coin is available for purchase on Coinbase.
• Critics believe that coin base could do better with their tax information.
• Coinbase has a relatively high fee on transaction amount charged.

The method of staking on Coinbase.

Definitely before we decide on staking it means we already have some significant value of that coin purchased and in order to stake these tokens, we just need to follow these simple steps. Coinbase provides the option for users to either make use of their mobile application or a web browser depending on the one each user is comfortable with.
The first step is to create a coin base account by simply making use of the sign up option, then go ahead to purchase the token of your choice after then go ahead with selecting settings and then financial services on the web and on the mobile application as well.

Cryptocurrencies available for trading on Coinbase.

Algorand, Cosmos, Atom, Ethereum and Tezos. Coinbase rewards users with an APY of up to 7.5%

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Poloniex Exchange

Poloniex is another crypto exchange platform that supports staking, poloniex used to be a very popular name back in the day but things have slowed down with the project after it was purchased by Circle in the year 2018. Poloniex got purchased by Tron Foundation in 2019.

Advantages of staking on poloniex.

Poloniex has a great amount of liquidity.
Poloniex offers low transactional charges on deposits and withdrawals.
Poloniex provides users with the option to remain anonymous except of course they are looking at trading extremely large volumes.
Poloniex is known to provide an excellent customer support.

Downsides of staking on poloniex.

Poloniex does not allow users with the option of funding with any other means than cryptocurrency.
Based on the fact that poloniex was hacked several years ago, there is still a lot of doubt about its security.

Cryptocurrencies available for staking on poloniex.

The crypto tokens available for staking are: ATOM (COSMOS), TRX, BTT, ATOM, and WIN.

Which is more preferable between Coinbase and Poloniex?

From my own research, poloniex offers more returns on profit on staking compared to Coinbase but I will still choose Coinbase as an option to stake my crypto token and the reason for that decision is based on the fact that I can actually purchase tokens with my credit or debit card unlike poloniex where I have to transfer funds from another crypto wallet.

What is impermanent loss?

The blockchain is known for high volatility, a liquidity provider might be subjected to loss based on the vitality of his trading pair. The greater the market flunctuations, the greater the loss will be for the liquidity supplier in question.

Liquidity suppliers go through serious risk every day, once there is a change in price different from when they enter into the market then there is a possibility of making profit or loss. During the period of impermanent loss it is still possible for the liquidity supplier to make profit if the price goes up but if reverse is the case and the price keeps going down then it is possible for the supplier to lose all his funds.

What is delegated proof of stake (DPOS)?

The idea of DPOS was created in order to give power to a larger share of people who will be able to validate who will verify the next block, this process is usually done through contributed vote of eligible users on a platform. This idea was first implemented by Dan Larimer on an exchange platform called Bitshares and now several blockchain have adopted the use of DPOS.

The integration of DPOS is an added advantage to the blockchain world, it has added a great transaction speed and increased efficiency in blockchain related companies. The provision of power to more users to make significant contribution such as being able to determine who controls the block, is a great deal.

Conclusion.

This was really one topic that made me spend more time doing a deep research, staking is always a good option but we just need to find out what platform offers a better service and how we need to stake the right way. Thanks to @steemit-team for the great privilege and thanks to professor @imagen for keeping me up on my feet for this one.