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How to stake PIVX
A simple step-by-step guide to staking for both node operators and delegators
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PIVX – or Protected Instant Verified Transaction (or Exchange) – is an open-source Proof-of-Stake blockchain focused on the protection of user and financial data. Integrated with ZK-powered SHIELD technology, the blockchain allows users to withdraw or receive funds transparently and anonymously. The project is run by the supporting community through a decentralised autonomous organisation (DAO).
As the blockchain is operated through a Proof-of-Stake consensus mechanism, the native cryptocurrency (also termed PIVX) can be staked to support the network. In return for staking PIVX tokens, users can earn rewards.
So, in this guide, we will take you through what Proof-of-Stake is and how staking works, along with why you should stake your PIVX coins.
The basics of staking
To make any blockchain work efficiently, the parties involved need to come to some sort of agreement. This problem underlies the basic concept of a network consensus – a method of verifying, correcting and maintaining the network.
Centralised financial networks, like your average bank, solve this problem by having a designated middleman. The bank itself serves as the validator for that network of transactions, providing the necessary assurance for the network to operate. Centralised financial institutions also achieve consensus because the ledger for that network is housed in a single place – the bank itself.
In contrast, blockchain is a decentralised ledger system – no single entity can provide the necessary assurance. To achieve consensus, blockchain networks need to verify transactions and write a copy of the ledger. However, that process is incredibly complicated, requiring significant resources to handle.
Blockchain networks currently use 2 prominent methods to achieve consensus: Proof-of-Work (PoW) and Proof-of-Stake (PoS). Proof-of-Work blockchains, like Bitcoin, achieve consensus and add new blocks to the blockchain through a process called mining. Computers compete against each other to solve a mathematical problem, and the winner updates the ledger and receives (mines) new BTC as a reward. The process is effective, but is extremely energy-intensive.
In contrast, Proof-of-Stake networks achieve consensus and add new blocks to the blockchain through a process called staking. This involves minting new coins rather than mining them. PoS blockchains use a collaborative approach that lets users stake (lock-in) the associated cryptocurrency in a node. Instead of competing to solve a mathematical formula, the number of coins staked determines the chances of being selected to validate transactions. Validation updates the blockchain ledger and the node is rewarded with new coins.
For more information on staking, see our complete guide here.
By locking PIVX into a crypto wallet, investors can use the coins to support the Proof-of-Stake PIVX blockchain. Although the coins can't be used for the duration of the stake, the investor can earn a percentage of new coins that are generated from the staking process.
PIVX describes itself as "maximally decentralised", which fits well with the emphasis on PoS rather than PoW. It also means that there are 2 primary ways to stake your PIVX:
- Stake via a node/master node
- Stake via a third party
One of the biggest differences between PIVX and other PoS blockchains, such as Ethereum, is that PIVX has virtually no requirements to run a node for staking. The Ethereum blockchain requires a minimum of 32 ETH to set up a node in the network. That's just under $80,000 at the time of writing. In contrast, if you own 1 PIVX coin, you can create a node. The lower barrier to entry removes one of the biggest disadvantages to active staking – meeting onerous node requirements.
Both staking via a node and staking via a third party have distinct advantages and disadvantages, so let's look at each in turn.
Staking via a node/master node
Solo staking as a node is the simplest method of staking PIVX. By design, PIVX is one of the easiest currencies to stake. The process involves locking PIVX into your PIVX Core wallet and turning that wallet into a node on the network. In return for participation, rewards are generated.
While the node requirements for PIVX are quite low, the rewards can also be lower than most other networks. That is because PoS works by ranking nodes based on the amount of crypto staked. Nodes/wallets with only a few PIVX aren't going to earn as much rewards as nodes that are staking a significant amount.
Master nodes, on the other hand, have been known to return 2.4 PIVX daily. However, master node requirements are much higher. You'll need 10,000 PIVX, a dedicated IP address and uninterrupted network access to create a master node. This means you can't easily run a master node from your laptop.
Luckily, for anyone interested in staking PIVX coins, there is another option.
Stake via third-party service
PIVX includes a core feature known as Cold Staking. Rather than requiring your locked wallet to be online, cold staking allows PIVX holders to contribute their coins to a designated "hot" or online wallet. The PIVX Cold Wallet feature keeps your PIVX technically separate and secure from the hot wallet and removes the need for you to always be connected to the network.
If this sounds similar to staking in a pool, that's because it is. The underlying functionality is slightly different, but the results are roughly similar. By contributing to a larger third-party pool of PIVX coins, the potential rewards are higher. These "soft staking" providers aim to make staking so easy that there's no excuse not to do it. One of the few downsides is that the platform often takes a percentage of the rewards, so it does become a tradeoff between increased staking power but reduced earnings.
The PIVX site includes a list of third-party staking services currently available for PIVX staking. The list includes Allnodes, Pecunia and StakeCube.
In this example, we will be using the Allnodes staking service.
PIVX Cold Staking via third-party
Risks and rewards from staking PIVX
Each staking method has its own advantages, so it is often good to look at both to see which method might be right for you.
Solo staking via a node or master node
- Enhanced privacy and security. The PIVX network is privacy-obsessive, making it nearly impossible for anyone to steal your information.
- Crypto wallet key security. If you lose access to your wallet, you could lose your entire stake.
- Typical market fluctuations. If the value of your PIVX drops, it could erase any gains from staking.
- Liquidity issues. All staking requires locking up your crypto assets for a set time, preventing you from buying or selling your PIVX for the duration of the stake.
- Easy access. Third-party staking services handle all technical requirements for staking.
- Reduced resource use. Staking uses electricity and requires constant network access; using a third-party staking service places that burden on them.
- Reduced crypto access. Using a third-party service will lock your PIVX up for a set time. While the PIVX Cold Staking approach does address this problem, by keeping your coins in your personal cold storage, it could still mean the coins are difficult to sell quickly when the time comes.
How much can I earn by staking PIVX?
Specific staking yields are always complicated to calculate due to the variety of factors affecting rewards. The rewards generated depend on how many nodes and master nodes are on the network at any given time, as well as the amount staked.
If the number of nodes in the network decreases, returns are likely to increase to incentivise new participation. However, if the number of nodes increases, returns are likely to decrease as an increase in nodes is no longer required.
Use the calculator on the PIVX website to determine how many PIVX coins you could earn as a reward for staking in the blockchain.
Why stake PIVX?
Staking is often seen as a solid way to earn passive crypto income. It also helps to reduce some of the risks associated with crypto investing. Staking returns a percentage of the original stake in the form of new coins. While the price of PIVX is variable, constantly earning new coins can help offset some of the fluctuations in price. If PIVX goes up in price while you're staking, so much the better!
More broadly, PoS is widely seen as the future of blockchain technology. The PoW model has several downsides and PoS provides a solution to many. Staking PIVX helps to validate not only the PIVX blockchain but also the entire PoS consensus theory.
The PIVX blockchain builds staking into every native PIVX Core wallet, removing many of the staking barriers that exist with other PoS currencies. By holding just 1 PIVX coin and by linking your wallet to the blockchain, a user can create a node in the network and start generating rewards. With similar ease, a user can also utilise third-party services to reduce the burden on resources and increase staking power. While total rewards aren't as high as other blockchains, the barrier to entry is much lower.
Check out the PIVX homepage for some extra resources on how to start staking PIVX today.
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