Concept

Joint staking refers to a collaborative approach where multiple participants pool their resources to stake (lock up) assets in a blockchain network, combining their staking power over the lock-up period and increasing the potential of earning rewards (and more rewards). With combined resources minimum staking requirements can be comfortably met. Furthermore, this strategy can reduce the risk embedded with staking smaller sizes. In short, individual investors can follow this strategy to achieve a scale that only larger players in the market can provide for.

Staking

Staking is the process whereby network participants can earn rewards (or returns) by locking their cryptoassets and other digital assets in wallets. Decentralized finance (DeFi) applications and protocols require a certain level of liquidity to ensure transactions are carried out in a smooth and efficient manner. As a distinct asset class, cryptoassets are increasingly staked, and nowadays provide an attractive means to earn passive investment income on such assets, whether individually or as part of an investment scheme. Staking utilizes a mechanism known as a proof-of-stake (PoS) consensus, being an alternative consensus mechanism to proof of work (PoW) for blockchains. Unlike coins that operate on a proof-of-stake mode, Bitcoin is a blockchain that operates on a proof-of-work model. Instead of consuming computing power to validate transactions, validators (miners), using proof of stake mechanism (on proof-of-stake blockchains), must provide a proof of ownership of staked coins (or assets). This mechanism substantially reduces the power consumption required for mining (as staked assets are already available), and also improves decentralization, security, and scalability.

Joint staking: potentiality

Joint staking works out to benefit both experienced users and beginners, as it forges a sense of community and shared objectives while also spreading out potential risks amongst users, rather than concentrating on a few. Rewards are shared by participants often in proportion to their contributions to the pool of staked assets (digital assets). Overall, joint staking aims to incentivize larger participation and make the staking process accessible to market participants, even those who may not have sufficient individual resources or technical know-how. The process may involve techniques such as smart contract, whereby staking and distribution of rewards would be transparent and fairer to participants. Joint staking may be based on participation by multiple stakers pooling their staked coins together and having the respective node hosted at the network to validate transactions and create blocks, while rewards are transparently and fairly shared.