How to Stake Cosmos: A Beginner's Guide to Earning Passive Income

How to Stake Cosmos: A Beginner's Guide to Earning Passive Income

What is currently known about the innovative Cosmos project and its digital coin ATOM? This project interests many users. That’s why information about its features and the possibilities of staking ATOM is so relevant. This article will cover these topics.

What Is Cosmos Blockchain

Cosmos is a blockchain platform that makes it easier for different blockchains to work together, based on the idea of an ‘Internet of Blockchains’. This network helps various blockchains communicate and share information easily, solving common problems with scalability and interoperability. At the core of Cosmos is the Cosmos Hub, the primary blockchain of the network. ATOM, the native cryptocurrency of the Cosmos Hub blockchain, is utilized for transaction fees and network governance, making it an integral component of the Cosmos ecosystem.

What Is Staking

Staking is the process of holding cryptocurrency in a designated wallet to support the operation of a blockchain network. In return, users receive rewards in the form of additional coins. Essentially, you “lock up” your coins to help the network function and earn income for doing so.

Top 5 Reasons Why You Should Stake ATOM

In this article, we highlight the top 5 reasons why you shouldn’t overlook ATOM staking. Discover how to start earning and how staking can enhance the network’s security and reliability.

Security of Your Assets When Staking ATOM

Cosmos users often wonder whether it is safer to simply hold ATOM tokens in their balance or to stake them. Both options offer the same level of security. During staking, the main components ensuring security are the Cosmos blockchain network and your wallet. For example, Gem Wallet always keeps your private keys confidential, even during staking. Meanwhile, the Cosmos blockchain manages the entire staking process, reward distribution, and other operational details. Validators and other participants can only influence the percentage of your rewards but do not have direct access to your assets or private key. In conclusion, holding tokens is just as secure as staking ATOM.

Participate in Transaction Validation by Staking in Cosmos Blockchain

Cosmos (ATOM) uses a system called Proof-of-Stake (PoS) instead of Proof-of-Work (PoW). Unlike PoW, where miners use large equipment that consumes a lot of electricity to solve complex mathematical problems and validate transactions, PoS relies on the contributions of network participants (stakers) who lock up their coins. This means it needs much less energy to keep the network running and secure. When you stake Cosmos, your money helps keep the network safe and decentralized. Staking also makes the network stronger because more people and validators get involved, which helps protect the network from attacks and problems.

Contribute to the Security of the Cosmos Blockchain by Staking ATOM

Everyone knows about the 51% attack. It happens when one person or group controls more than half of the network’s computing power or staked tokens. That’s why the decentralization of capital and participants is important. ATOM holders can lock their tokens and join the staking process, contributing to the security and stability of the Cosmos blockchain.

Grow Your ATOM Tokens by Participating in Staking

Staking ATOM allows you to earn more ATOM tokens as rewards. By holding and staking ATOM, you can generate passive income. The rewards can be quite substantial, making it an excellent way to grow your tokens over time without the need for trading.

Participate in Governance

By staking ATOM, you can help make decisions about the Cosmos network’s operations. You get to vote on significant proposals and changes that affect the network’s future. Your staked ATOM gives you a voice in the community, allowing you to influence protocol updates and reward changes.

Getting Started With Staking ATOM

Here are several steps to help you get started with staking ATOM.

Setting Up a ATOM Wallet

First, install a wallet that supports ATOM tokens. Gem Wallet is an open-source, self-custodial wallet available for download on Android and iOS. After installation, save your seed phrase,and you’re ready to receive your first ATOM tokens for staking.

How to Obtain ATOM Tokens

After installing the wallet, you need to obtain ATOM tokens. There are several ways to do this: transfer tokens from an exchange, ask friends to send them to you, or conveniently purchase tokens with a credit card directly within the wallet.

How to Stake ATOM

In the wallet, select the staking function and follow the simple instructions: choose the desired amount of tokens and a validator from the offered list. We have a detailed step-by-step guide How to Stake ATOM

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