Cosmos is one of the most important blockchain ecosystems in existence today. It currently manages more than $100 trillion worth of digital assets. Cosmos’ market capitalization is crucial as more assets are staked on-chain. Chains with a higher market capitalization are more secure from threats like 51% attacks, and offer greater security and assurance for their communities.
By staking your assets onto-chain, you can play an active part in protecting the Cosmos network. You’ll be rewarded for lending security to the network. We’ll be discussing the risks and benefits of staking, as well as what you should consider when choosing a validator. We will also discuss the major staking options available in today’s Cosmos network.
What is Staking?
Staking involves committing tokens to the blockchain for a time period to secure it and to earn rewards. This gives you the opportunity to grow the network and to make your assets more productive. Staking is a way for the blockchain to use your tokens to secure the network and make transactions in exchange for rewards. Staking can be done on PoS blockchains such as Cosmos chains. Validators are used to verify transactions based on the stakeholders have in the blockchain (their “stake”)
Staking is a way to ensure that you have complete control over your funds. You retain full custody of your tokens and they never leave your wallet. There is no waiting period and rewards are paid out every day, sometimes multiple times per day. The lockup period for staking can be as short as 7 to 28 days depending on the token and blockchain. You can stake your tokens on a cryptocurrency exchange such as Binance or Kraken. To take custody of your crypto, you must trust a third party.
Choosing the Validator
You must choose a validator with whom to stake your tokens. This is known as delegating your tokens. This is how you become a delegator. PoS Blockchain Validators verify transactions to ensure that they are valid and accurate and then add them to the chain.
You should take into account several factors before you choose a validator. These include validator uptime, activity record, commission taken from your rewards, unbonding time, and the reputation of the validator. To ensure that they aren’t known for bad behavior, make sure you look at the history of validators. The network will punish validators who consistently fail to sign transactions or double-sign them in what is called “slashing”.
A validator can be slashed by a Cosmos chain. This means that they lose funds and miss out on rewards. For Cosmos chains, the penalties range from 0.01% (liveness slash), to 5% for validators who commit double-signing events on the blockchain.
It is important to choose a validator who has a track record and is involved in the growth of the network. They should also have a shared interest in its success. There are many resources that provide information on validators. Mintscan.io, which will tell you how active validators in governance are, their commissions, uptime, and so on, is a great place to start. Many of the individual staking options mentioned later also provide descriptions and information on their network validators.
Consider delegating staked tokens to multiple validators. Also, keep in mind that you can reduce the chance of any validator holding more than 50% of the market share if they are not among the top 10.
You have the ability to help keep the network decentralized. Although it may seem tempting to pick a centralized exchange because you recognize its name, this is not in the best interests of the network in terms of security and decentralization. It is often difficult to get quorum because centralized exchanges tend not to count votes. They don’t contribute to or develop the network beyond what they need. Before you decide to invest in centralized exchanges, it is important to do a thorough assessment.
A validator that charges 0% commission might be a good option to maximize your return. However, a validator requires a lot of work. It also comes at a significant cost to the operator. The validator’s commission rate is a contribution that helps to cover its expenses. Supporting validators through commission is better than zero commission.
Understanding the differences among validators and their contributions to the ecosystem can be time-consuming. It’s worth the effort to research and do the necessary work to make sure that your delegations empower validators who are contributing to the ecosystem.
The benefits of staking
If you don’t support a crypto project once you have made the decision to do so, your tokens will remain in your wallet. You can stake your tokens to help secure the network and the ecosystem, rather than just keeping them on an exchange. You can add “stake” to the Blockchain to increase its resistance to attacks and improve its ability to process transactions.
You’ll also be eligible to receive staking rewards, as mentioned. You will receive different rewards depending on which token you choose and how much the validator commission is. Your rewards can be claimed daily or multiple times per day. This allows you to secure your tokens and the network. You are in complete control of your tokens, unlike centralized exchanges that have no control over private keys. When you declare your tokens with blockchain, they never leave your wallet.
Your tokens will be kept safe for a certain time so you can avoid panic selling in market conditions. As an added reward for your contribution to the security of the blockchain, you may be eligible for new tokens through airdrops.
What are the Risks of Taking?
It is possible to lose your investment. Market risk is a key factor in crypto assets. You will need to accept a decrease in the price of your token, even if you receive rewards. The lockup period means that you won’t have the ability to sell your tokens immediately. This could be a blessing depending on how you are tolerant of volatility.
The validator you choose is another risk when staking. Your stake could be reduced if your validator is not on the right track. This can happen up to 5% in some networks. External threats like 51% attacks are always possible. In established blockchains such as the Cosmos Hub, 51% of attacks are rare. These assets are protected by billions of dollars in digital assets which makes the cost of an attack prohibitive. Emerging blockchains that are still in bootstrapping phase are more susceptible to attack. The potential risk is higher for those who have staked more.
Participation in the Cosmos Network
There are many ways to stake your tokens in the Cosmos network if you want to support the growth of a Blockchain ecosystem. Let’s take a look at some of the most popular noncustodial products to help you retain control over your tokens.
What’s the Difference Between Wallets & Dashboards
Before we get into the solutions, let’s first clarify the differences between dashboards and wallets. Also, how to use both together to stake your tokens.
Crypto wallets protect your private keys, which are the passwords that you use to access your cryptocurrency accounts. They also allow you to keep custody of your assets. There are many types of crypto wallets, from web-based wallets and mobile apps to paper wallets and hardware wallets.
Software wallets can only be used in blockchain ecosystems (i.e. Cosmos and Ethereum, whereas hardware wallets typically support cryptocurrencies from multiple ecosystems (e.g. Bitcoin, Ethereum, Cosmos). There are three main types of wallets: web-based wallets like Keplr and MetaMask that can be used as a browser extension; desktop wallets such as Atomic Wallet and Cosmostation that can be used on your computer to connect to hardware or mobile wallet. These wallets allow you to store and send/receive crypto and import existing wallets into the app by scanning a QR Code.
Ledger is a hardware wallet that allows you to store your assets in cold storage, and then connect to an app (a dashboard) such as Emeris or Keplr for transacting. Your staking tokens will always be in your wallet. However, if you don’t connect to a dashboard, your tokens would not be able to be staked. Let’s now take a look at the way dashboards work.
You can stake your tokens with dashboards, or interfaces, that connect to your wallet (software or hardware). No matter which wallet you use, all transactions will need to be “signed” with your wallet. This is to confirm that you want to do the action. A browser extension such as Keplr is the best way to quickly stake your tokens. Open the browser extension Keplr to quickly stake your tokens.
The dashboard allows you to see your token balances and pending rewards. You can also see the validators with which you stake, as well as other information depending on the solution. You’ll find links to detailed guides and numerous resources throughout this article.
Cosmostaion, Keplr and Cosmostaion are the main staking options available in the Cosmos network. Others, such as Emeris or OmniFlix, only offer wallet functionality. We’ll keep you updated on new features as they become available.
Cosmostation is both a wallet-and-dashboard solution. It offers a mobile wallet that can be used to stake directly from your smartphone, as well as a web and mobile wallet that will allow you to sign transactions and connect to your hardware wallet. Cosmostation is a long-standing member of the Cosmos ecosystem. It has a solid reputation for outstanding customer support via products such as Cosmos Explorer Mintscan and its web wallets. Cosmostation supports over 30 networks, giving users a wide range of options.
Cosmostation also has an enterprise-level validator on several networks. This provides reassurance in selecting a reliable validator. Cosmostation allows you to stake everything from one location. Cosmostation allows you to interact with your web wallet or mobile wallet easily. It also supports many IBC-enabled tokens. Cosmostation has many support resources and guides to assist you if you have any questions.
You can view the history, activity and uptime of validators from Mintscan’s validator section. Moonpay integrations allow you to convert fiat currency into crypto. Cosmostation will launch a browser extension to enhance your convenience. This is expected to be available later in the year. Download Cosmostation for Android and iOS to get started with staking using your mobile wallet.
Keplr quickly became the preferred wallet for the Cosmos ecosystem. Staking with the Keplr dashboard and wallet is easy. Keplr has a mobile wallet app available for Android and iOS, as well as a Metamask-like browser extension. This is the best way to get started with staking securely. Keplr offers a simple dashboard that allows you to view your tokens, staking balances and rewards across the 20+ chains it supports. The staking dashboard can be integrated into Cosmos chains to allow users stake tokens within their ecosystems.
Keplr’s browser extension makes it easier than ever to sign staking transactions. Keplr is also a supporter of Cosmostation, which is one of the most popular networks. Keplr is planning several enhancements to the interface to improve the user experience. The validator section is one example.
It is crucial to choose the right validators. Newcomers to Cosmos might not know how to do this. Keplr hopes to assist validators who are active in gaining significant voting power. This will be done by updating the validator page and adding descriptions that highlight validator contributions to the staking dashboard. To encourage more interaction, validators will be able to communicate with their delegators. You can find a wealth of resources for Keplr stakes here.
Emeris dashboard also allows you to stake 28 Cosmos ecosystem tokens. Emeris is simple and easy to use. It provides clear visualizations with clear overviews of stake balances and rewards for each chain. You can also see a concentrated aggregate on all balances on your main portfolio page.
Emeris is currently in beta. In the lead-up to Emeris’ public launch, the team will continue adding features such as version 2 of Emeris Staking. Staking V2 includes an auto-compound function that automatically takes stake rewards and compiles them on compatible chains. This eliminates the need to manually claim or restake and maximizes rewards generation.
Emeris stakes require you to download and connect the Keplr account. Emeris will be available for public launch in the second half of this year. It will also offer a mobile wallet and browser extension. Open the Emeris app to try staking. Here is a step-by staking guide. You can also find additional resources.
Other Staking Solutions
Atomic Wallet is another option for staking. It’s the first non-custodial cryptocurrency wallet to use cross-chain atomic switch technology. Atomic Wallet supports all major blockchain ecosystems and more than 300 tokens. It is widely used in crypto industry and has attained more than 3,000,000 users. You can instantly swap tokens and make fiat-to-crypto transactions.
Atomic Wallet, like Cosmostation is available as a mobile and desktop wallets that can be connected to your hardware device. No browser extension is available at the moment. Atomic Wallet makes it easy to stake and allows you to manage multiple chain tokens in one place. Atomic Wallet has a slightly lower APR rate at 10% on ATOM. This solution currently supports only the Cosmos Hub (ATOM) and no other Cosmos tokens. This link provides more information on Atomic Wallet staking.
OmniFlix has been a long-standing contributor to the Cosmos Network. They have worked with many Cosmos SDK-based project since 2018. In 2018, they demonstrated a working prototype at Game of Zones and launched the FlixNetx series of testnets. OmniFlix creates multiple tools to support the growth of the ecosystem. This includes interfaces for different Cosmos SDK-based chain. OmniFlix’s inSync Staking Interface was created to enable blockchains to interact with each other. It has been integrated by a growing list of Cosmos chains, including Juno and Fetch, LikeCoin and Cheqd. Stargaze has also forked Rizon, Celestia and Stargaze.
The OmniFlix InSync staking interface makes it easy to stake and delegate tokens. It is clean and simple. OmniFlix inSync allows users to interact with up-and-coming chains and support their growth. They also earn rewards for staking.
OmniFlix inSync, an open-source tool was awarded the Agoric testnet Challenge in June 2021. It launched its first Juno staking interface upon its mainnet launch. The year ahead will see the creation of infrastructure for NFT creators as well as communities that bring together validators, delegators, and other stakeholders. This will help to continue growing the Cosmos ecosystem. Here’s a preview of OmniFlix inSync’s future plans.
You will need to download the Keplr wallet in order to stake with OmniFlix.
BitSong recently launched the BitSong Multichain Wallet. This is a simple interface that Cosmos chains can use to interact with each other. The dashboard allows users to stake tokens, redelegate, undelegate, and vote on proposals. BitSong also lets them bridge BTSG between ERC-20 and bitsong-mainnet. The BitSong wallet currently supports seven Cosmos chains: BitSong and Cosmos Hub, Osmosis and Juno. There are more integrations planned.
In its current version, users will need to connect the interface with Keplr’s browser extension. The BitSong Chrome extension is next on the agenda. This will allow for easier and quicker access to the ecosystem. BitSong is working on a feature that will allow token holders to submit governance proposals directly from their wallets. It will also give them the ability to view statistics on the blockchain. The Wallet is open source and can be found in this Github repository. You can find more information on the BitSong blog.
This list is by no means complete. You have more than 30 options for wallets to use for staking tokens. We hope you found this guide useful. It highlights the most popular solutions, as well as other options.
There are many options available depending on your preferences. Staking in Cosmos is easy and accessible for everyone. By staking in Cosmos, you can help to grow the ecosystem and earn rewards.