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Binance launches staking service, partnership between increasing exchanges and validator pool companies

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Binance, the world’s largest exchange by volume, has launched a staking service. The program is designed to automatically increase the number of tokens if the user has a target token in the exchange account.
The target tokens are as follows.

NEO
Stellar (XLM)
Komodo (KMD)
Algoland (ALGO)
Ontology (ONT)
VECHAIN ​​(VET)
Tron (TRX)
BITTORREBT (BTT)

Increasing cases of partnerships between exchanges and validator pool companies
Another exchange that offers such staking is Poloniex. Poloniex has partnered with a validator company to provide a staking service for Atom, a token of COSMOS. This service is intended for users outside the United States.

Poloniex only stakes 25% of the user’s Atom deposit in order not to affect the user’s withdrawals. 25% of the fee will be collected as a commission, 10% will be paid to Poloniex, and 15% will be paid to validator partner Infinity Stones. As a result, users can expect about a 3% reward per year.

In the case of an exchange, since it affects the user’s withdrawal, not all tokens can be staking and the fee will be higher, so the number of rewards will be smaller than general staking.

This rate is less than selecting and validating an individual validator. For example, if you delegate to a validator with a 15% commission, the annual fee is 8.8%. PoS stands for Proof of Stake and is a different algorithm from PoW (Proof of Work) including Bitcoin (BTC) and Litecoin (LTC).

PoW decides who has the right to add a new block to the blockchain by competing in computing power. To explain simply, PoW has a competition to decide the block generator by 1CPU = 1 vote.

On the other hand, in PoS, the person who generates a block is determined by the number of tokens.
1 token = 1 vote. It is designed based on the premise that people who have tokens will have few incentives to hurt network credibility by making double payments. And you can get tokens by generating blocks.

Even with PoW bitcoin, if you generate a block successfully, you will receive a new bitcoin, but this is the same mechanism. In Bitcoin, this process is called “staking” in PoS blockchains such as COSMOS and Tezos, while it is called “mining”. In other words, investors who own tokens can earn block-like rewards and income like interest by participating in staking.

Disclaimer - OBN is an informational website which aims to give the latest blockchain related news to the readers. Articles on OBN should not be considered as investment advice. Trading cryptocurrencies is a high-risk investment, every user is advised to consult an expert before making any decisions.