Crypto Academy / Season 3 / Week 1 - Homework Post for @imagen|| Staking

Greeting to all. In this lecture, I learnt about staking, delegated proof of stake, and impermanent lose. Now i am going to attend my homework as per my understanding for professor @imagen.

Research and choose 2 platforms where you can do Staking, explain them, compare them and indicate which one is more profitable according to your opinion. (Binance is not allowed)

Before answering the above question , I would like to clear the concept of staking. We have learnt the multiple method of earning from crypto world in season 1 and season 2. The exchange platforms are used for purchasing, selling and performing multiple other activities through which user can get reward. The staking is nothing but simply holding the coins for some duration. The investors invest money, buy coin, hold them for specific duration and get the money.

The staked amount cannot be withdraw till the duration not completed. Once the time for which you fixed your assets get finish, you can withdraw your assets. Many exchanges are there on which you can stake the crypto currencies of your own choice.

But here i would like to compare the Kucoin exchange platform with Coinbaise.

Kucoin:

Kucoin is an exchange platform which offer its user to earn the money by staking their assets. It was founded in 2017. Many crypto currencies are offered to the investors for staking purpose. This exchange platform is being used by multiple traders throughout the world who are investing their money using this platform, staking their assets and doing many other things for earning the profit. This platform use the Proof of stake algorithm for enabling its user to stake their assets and to earn the money.

The concept of Soft staking is used in this exchange platform for staking. Soft staking mean that you do not need to lock your money. The investors just stake their assets and in return get reward. The investors are rewarded daily for their staked assets. This exchange platform is not expensive blockchain platform. The transaction fee on Kucoin is cheaper which attract the attention of many investors to work on this exchange.

Coinbase:

The other platform which i choosed for discussing for this task is Coinbase. This platform was introduced in 2012 . As many other exchange are banned in US but this was the top rated for transaction purpose in United state in the March of current year. No doubt that the transaction fee of this platform is high but still it consider a best platform for staking purpose. This platform use the Proof of stake algorithm for enabling its user to stake their assets and to earn the money

This exchange platform also enable its user to earn money by the staking method. The users here lock their assets and earn the profit. You can perform the transaction of multiple crypto currencies over this platform too. This exchange support multiple currencies to buy, sell, transact, stack, etc.

The users select the amount of money they want to stake, set the time period for which they want to lock their money and staking done.

Difference between Kucoin and Coinbase

The kucoin is consider less cheaper as compare to the Coinbase because the transaction fee of Kucoin is much lower. The investors consider the Coinbase platform a little more expensive that's why not much user are attracted to Coinbase. But Kucoin on the other hand is more useful as the transaction fee is not high on this platform.

The Kucoin was introduced in 2017 with latest feature which attract the investors to perform trading over this platform. But as Coinbase is an old platform as it was created in 2012, so it's feature are old as compare to the Kucoin.

As Kucoin is the latest as compare to the Coinbase, so it is better than Coinbase in some aspect. One among those aspect is the number of currencies which are offered on this platform. The Kucoin allow the investors to perform the transaction on round about 200 crypto currencies. You can make investment whichever currency you like over this platform as a wide verity of currencies is available here. Buy Cucoin support only approximately 50 currencies. This number of currencies is much lower as compare to the Kucoin currencies.

The kucoin exchange platform work according to Soft staking. It allow its user to do the soft staking. You can stake your investment and can earn money but their is no need to lock them. But on the other hand, the Coinbase do not support the Soft staking. Here you need to lock your assets for some fixed time. You are not able to get you locked money before that fixed timing.

Kucoin is better than Coinbase

So as per my analysis, the Kucoin is better than Coinbase. This platform offer many more of crypto currencies for the user but Coinbase as compare, not have this much currencies over it. The above factors shows that Kucoin is cheap and suitable for staking as it do not restrict its user to lock the assets for staking.

What is impermanent loss?

While trading, sometime we have profit and sometime we have lost. Some lost are permanent. Mean that if you buy a currency in 200$ in last month and now it price decline to the 100$ because of market goes down. So if you sell your coin at this time, then you would have lose and this lose will be permanent. But some loses are impermanent.

Impermanent lose, as it's name specify are those loses which are not permanent. These loses are temporary. The main reason of this lose is the market volatility. When the trading pair get volatile, then the liquidity provider face the loses. Such loses are counted as temporary lose or impermanent lose.

In impermanent lose, the price at which you deposited the coins get less as compare to the price of coin which you have right now in your wallet. You then face lose but this lose is not permanent.

What is Delegated Proof of Stake (DPos)?

The DPoS is a consensus algorithm and an advance version of PoS. It was introduced in 2014. The DPoS is used to verify the transactions on the network. When a transaction is performed, all the coin holders on the network participate in verification of transaction. But this not happen in DPoS. The nodes on here vote to the delegate and then the elected delegates verify the transaction.

The node which have the higher coins in their wallet, their votes worth more. When a transaction is performed, then the all participant nodes vote to the delegated nodes. The delegated node which is selected verify the transaction. But PoS is not work according to this strategy. In PoS, all the nodes who have the coins on the network are able and participate in the transaction verification. The delegated nodes ensure that their nodes are gathering transactions and forming the blocks. Then those block verify by the delegated nodes.

The DPoS is very fast as compare to the Proof of stake. The proof os stake is less efficient if we talk about the energy. The PoS is less energy efficient but DPoS on the other hand, is more energy efficient.

How DPoS work

In DPoS, the nodes on network voted to the delegated node, the delegated node which got selected verify the transaction. Then that is responsible for rewarding the nodes who participate in their voting process. The more the voting power, the more the reward will be. The delegators make sure that all their nodes are working properly.

Conclusion

Staking: The staking is becoming popular day by day and traders are getting interested to earn money by staking method.

Impermanent lose: Then second thing i learn is impermanent lose. To avoid the impermanent lose, always stay away from volatile coin. Sometime the impermanent lose become permanent. So avoid the volatile coins.

DPoS: The DPoS is the advanced version which is use for maintain the the network participants. The DPoS is more effective than PoS. I am very thankful to professor @imagen for this amazing lecture.