Description: Pooled staking is a method within the realm of ‘Proof of Stake’ (PoS) that allows multiple participants to combine their resources, such as cryptocurrencies, to increase their chances of validating blocks on a blockchain and thus earning rewards. This approach is particularly useful in networks where a significant amount of tokens is required to participate in the validation process. By pooling their assets, participants can reach the necessary threshold for staking, which might otherwise be unattainable for individuals with smaller amounts of cryptocurrency. Additionally, pooled staking encourages collaboration and community, as participants can share both risks and rewards. This method can also be managed by third-party platforms, which act as intermediaries, facilitating the process and allowing users to participate without needing deep technical knowledge. In summary, pooled staking not only democratizes access to block validation but also optimizes resource use within the cryptocurrency ecosystem, promoting greater decentralization and security in the network.
History: The concept of ‘pooled staking’ began to gain popularity with the rise of cryptocurrencies that use the ‘Proof of Stake’ (PoS) mechanism starting in 2012 when the cryptocurrency Peercoin was launched. However, it was with the growth of platforms like Ethereum 2.0 and other blockchains that implemented PoS that pooled staking became a common practice. In 2020, the launch of Ethereum 2.0 allowed users to participate in pooled staking through third-party services, making it easier for those who did not hold the minimum amount of 32 ETH required to operate a validation node.
Uses: Pooled staking is primarily used in the cryptocurrency space to allow users to participate in transaction validation and the creation of new blocks without needing to hold large amounts of tokens. This is especially relevant in PoS networks, where active participation is crucial for the security and functioning of the blockchain. Additionally, pooled staking enables users to earn rewards more accessibly and efficiently while fostering the creation of communities around specific projects.
Examples: An example of pooled staking is the Ethereum 2.0 staking service, where users can join staking pools through platforms like Rocket Pool or Lido. These platforms allow users to deposit any amount of ETH and, in return, receive a proportional share of the rewards generated by staking. Another example is pooled staking on the Cardano network, where users can delegate their ADA to a staking pool, thereby increasing their chances of receiving rewards without needing to operate a full node.
