Staking has become a popular way to earn passive income in the crypto world, but how did it get so big? Let’s dive into the history of staking and see how it transformed from a niche concept to a mainstream tool.
The Problem with Mining
Before staking, the dominant way to secure a blockchain was through Proof-of-Work (PoW). Miners competed to solve complex math problems, using tons of energy and expensive hardware. As cryptocurrencies gained popularity, the network became overloaded, and PoW couldn’t keep up with the growing number of transactions.
Proof-of-Stake: A More Efficient Solution
Enter Proof-of-Stake (PoS). In 2011, a user on the BitcoinTalk forum proposed a new system where instead of solving math problems, validators would be chosen based on the amount of cryptocurrency they held. This would reduce energy consumption and make transactions faster.
The Evolution of Staking
Staking went through several key stages:
- Early Adoption (2014-2017): Crypto projects like Blackcoin and Nxt started using PoS, making it a more environmentally friendly alternative to mining.
- Delegated Proof-of-Stake (2014): The BitShares platform introduced DPoS, where token holders could vote for a limited number of validators, making the network even more efficient.
- Staking as a Service (2018): Platforms started offering “staking as a service,” allowing users to stake their coins without running their own nodes, making it accessible to a wider audience.
- Ethereum 2.0 (2020): Ethereum, one of the largest blockchains, transitioned to PoS, marking a major milestone for staking and triggering a “staking boom.”
- Innovation (2024): Staking continues to evolve with new platforms offering various staking options and higher rewards.
The Pioneers of Staking
Several crypto exchanges were early adopters of staking, making it easier for users to participate:
- Binance (September 2019): Binance launched staking for coins like NEO, VET, and ONT.
- Kraken (December 2019): Kraken allowed users to stake without running their own nodes.
- OKEx (Late 2019): OKEx offered multiple token staking options.
- KuCoin (2019): KuCoin introduced staking through its Pool-X platform, offering locked and flexible stake amounts.
- Coinbase (2020): Coinbase started offering staking for Tezos (XTZ).
These exchanges made staking accessible to a wider audience, simplifying the process and removing the need for technical expertise.
The Future of Staking
Staking has become a key part of DeFi protocols, contributing to network security and the development of new projects. It’s a sustainable and secure way to earn passive income, and its popularity is only expected to grow.
