How do DeFi Staking Platforms Work?
So the process begins by users depositing their cryptocurrency into a DeFi staking platform, which locks up the crypto assets with a smart contract. The contracts handle the entire staking process single-handedly without needing intermediaries. Also, the platform operates on a proof-of-stake (PoS) or similar consensus mechanism. Users participate in the network’s validation process by staking their tokens, securing the blockchain, and validating transactions.
For doing so, the users earn rewards typically in the form of additional tokens. The reward is based on factors like the amount staked, duration, and network conditions. The more tokens you stake, the higher your potential rewards.
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