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How does Staking work?
At its core, staking leverages the Proof-of-Stake (PoS) consensus mechanism, where transaction processing and block creation are entrusted to designated, trusted nodes. Validators take turns supporting the network, and the likelihood of being selected to generate the next block correlates directly with the number of coins held in the validator's wallet. This collateral serves as a guarantee of the validator's commitment to the system's integrity, as any malicious actions would result in personal losses.
To enhance their reputation and attract additional assets, validators incentivize other token holders by sharing a portion of their staking rewards. While becoming a validator is an option, it requires substantial resources and technical expertise to ensure seamless synchronization with the network. In many PoS systems, validators are chosen and re-elected through community voting, making the process competitive. Alternatively, individuals can participate in staking by locking their coins and earning dividends over time. Specific staking requirements may vary across different blockchain ecosystems, necessitating a comprehensive understanding of each network's staking protocols.
The act of freezing virtual coins serves as a safeguard against inflation, as token holders are incentivized to retain their assets rather than impulsively liquidating them. This approach maintains a delicate equilibrium between supply and demand, mitigating asset depreciation risks.
As you engage in Octus Bridge staking, remember that your participation contributes to the network's security, decentralization, and economic stability. By comprehending these staking concepts, you unlock the potential to actively shape the future of the Octus Bridge ecosystem.