Why is Staking Important in DeFi Mining (Why is Staking Coin Important in FIL Mining)

08/10/2023 13:18 • AI Insights • 51 views

Staking is an essential part of DeFi mining. However, it is also a very important aspect because the more tokens you stake, the higher their value becomes. For example, now the transaction fees for Uniswap and Compound are relatively low. So, we often hear the term “staking” because it is common. But actually, “staking” is not something new. Many users who are interested in staking or have some understanding of it already know this.

Many people ask me why staking is necessary. First of all, “How is the mining yield in the decentralized currency market?” This statement has been widely circulated for many years. The term “staking” first appeared after the Bitcoin bubble in 2017, and then due to various reasons, some incorrect descriptions emerged—that is, there were no verifiable assets that would be attacked or lost by hackers, etc. Therefore, people thought that “locking funds is just for making quick money”.

However, as more and more developers use their own code as open-source programs, and with the upcoming Ethereum 2.0, blockchain is gradually entering the mainstream field: “Mining requires staking to make money”, “If the price of ETH rises to $20,000, would you still use your EOS to buy mining machines?”, “If you want to hold long-term, then you have to choose to hold long-term.” There is a question worth discussing in all of this.

1. “Locking” refers to the block rewards at a certain point in time and can be understood as the total number on the network, which represents the difference between the number of participating nodes in the network and its current state.

2. “Staking+Unstaking” refers to the situation where the number of participants in the network exceeds the network’s effective computing power or other resources, thus gaining more rights and interests. At this time, “staking” will become a new gameplay, similar to the mentioned game before. Users deposit ETH, and the system will give corresponding amounts of Staking rewards based on the percentage of their deposits, and the rewards for stakers will also increase accordingly. This will make it easier for miners to invest more computing power to improve their mining efficiency, and it can also be used for other purposes, such as borrowing on loan platforms, etc. “Staking+Unstaking” means that the mining pool operator needs to provide staking certificates to exchanges through delegation to obtain rewards, while obtaining corresponding staking certificates and governance permissions. All of these can be done through “staking-unstaking”. Of course, this method may also have certain limitations: some projects may apply these rules at the protocol level, such as Aave’s DAI liquidity supply pool, or even like AAVE, they just want to be a staking service provider, but it is not really like that.

4. Regarding the concept of “staking/dividends”, different opinions have been raised. For example, in the Staking model of Uniswap,

Why is Staking Coin Important in FIL Mining

Why is staking coin important in Filecoin mining? In order to solve the inflation problem of FIL, a certain amount of tokens need to be staked to pay for Gas fees when the mainnet goes live.

Currently, FIL is the only token with the highest locked value in the entire network (with a market value of about 100 million US dollars), and this Staking reward mechanism is also one of the most watched projects in the Filecoin community. So, if FIL is considered a staked asset, then it is a decentralized storage network that allows users to perform a series of operations such as storage, transactions, and staking. But there are also some risks involved: firstly, due to the instability of FIL in the pool; secondly, the high staking rate leads to excessive price fluctuations; finally, when you invest a large amount of funds, you may not receive enough economic benefits.

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Why is Staking Important in DeFi Mining (Why is Staking Coin Important in FIL Mining)

Why is Staking Coin Important in FIL Mining

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