On one side there is the SEC that insists on decimating crypto staking. On the other, there is this misunderstanding of said activity from the crypto community. Sergey Vasylchuk, co-founder and CEO of Everstake, denounces this naivety which would be the source of many problems. Overview !
Staking crypto, a worrying situation
Lately it’s a Gary Gensler in the fight against staking activities crypto exchanges like Kraken and Coinbase which made headlines.
Could this be the reason that prompted the CEO of Everstake to come back to the basics of cryptocurrency staking ? In any case, his long talk on problems related to misunderstanding of this activity speaks volumes.
The basics of crypto staking
To better understand cryptocurrency staking, you have to start by knowing about the difference between Proof-of-Work (PoS) and Proof-of-Stake (PoS).
PoW, which governs bitcoin, requires miners very high computing power. The more powerful their machine, the more they will have chances to mine a new block and get new coins as a reward “.
Regarding PoS, the obtained corners from staking have other values than ” imposed by the community in the Proof-of-Work. These coins indeed represent a right of governance, that is to say a right to influence the development and progress of a blockchain itself.
However, we agree to note that PoS does not require the management and maintenance of nodes or the perfect mastery of DevOps. Among other things, it authorizes the use of the expertise of a “validator”, some kind of deputy in the cryptosphere. It is to him that all the powers will return to make the PoS blockchain of the cryptocurrency staker work properly.
The Annual Percentage Rate (APR), a crucial issue
The fact that the crypto delegator or staker only focuses on the APR is seen by Sergey Vasylchuk as a thorn. The more the focus is directed towards a high APR, the more the cryptographic economy is reduced to imitating the fiat economy. However, we are not unaware of the disadvantages of this classic scheme.
What is the difference between FED money printing and crypto staking if the latter allows crypto earnings from scratch ? We have found that the printing of new dollars has always caused monster inflations. The worst is therefore to be feared with crypto staking centered on high APRs.
Gold, greed has always been the cause of many downfalls, to cite only the case of FTX from SBF. A blockchain, the CEO of Everstake points out, doesn’t need greedy people. Because the mission of a crypto staker is to make a blockchain efficient. So, the tokens will gain in value gradually and not spontaneously.
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